Preamble

The House met at half-past Nine o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Inward Investment

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]

The Minister for Energy and Industry (Mr. Tim Eggar): This is the first ever full debate in the House on inward investment. That is somewhat surprising as inward investment is one of the Government's and this country's greatest success stories. That is a bold statement. Let me substantiate it.
Over 30 per cent. of all foreign direct investment in the European Union has come to the United Kingdom. Ninety-eight of the "Fortune" top 100 companies have chosen to locate in the UK. No less than 43 per cent. of all United States investment in the European Union made by more than 3,500 companies is situated here in the United Kingdom.
We have consistently attracted the major Japanese consumer, electronics and vehicle manufacturers. One thousand German companies have established facilities in Britain. Many of them are here to take advantage of Britain's more competitive environment. Nearly 50 per cent. of Korean investment in the European Union has been located in the United Kingdom. Since 1979, the Invest in Britain Bureau has registered more than 4,000 inward investment projects with more than 600,000 associated jobs. In the last financial year alone, almost 100,000 jobs were created by, or linked to, inward investment.
That has led to some spectacular export achievements. For example, over 35 per cent. of all personal computers in Europe and over 55 per cent. of Europe's workstations are now manufactured in Scotland. In addition, we are now a net exporter of televisions.
The hon. Member for Middlesbrough (Mr. Bell) may have some difficulty challenging those statistics, not least because the most significant recent inward investment, that of Samsung from Korea, will provide jobs to many hundreds, and perhaps thousands, of his constituents. Indeed, the statistics might not be very convenient from the Opposition's point of view. However, all those foreign business men cannot be wrong. Let me be slightly more specific than I have been in simply quoting the statistics. I shall list some of the major inward investment successes of the past decade.
I noticed my hon. Friend the Member for Derbyshire, South (Mrs. Currie) in the Chamber. She will be aware that Toyota has invested £700 million in its car plant at Burnaston. That has created 3,000 new jobs. Fujitsu of Japan invested £400 million in a semi-conductor factory in County Durham. Nissan currently employs more than 4,200 people at Washington, County Durham. MBNA of the United States invested £42·3 million at Chester in its

new credit card undertaking. That has created 200 jobs. Yamazaki Mazak, the No. 1 CNC machine tool company in the world, invested £40 million in Worcester, employing 280 people in the constituency of my hon. Friend the Member for Worcester (Mr. Luff).
Oracle Systems of the United States announced in April this year that it was investing £50 million in its computer software factory at Thames Valley park east of Reading. Robert Bosch of Germany has invested £100 million in a new factory near Cardiff to produce car alternators. That has created 800 jobs. Sony of Japan has expanded its Bridgend factory, which produces colour televisions. It is spending £147 million and creating another 1,400 jobs.
NEC of Japan announced only last month its decision to invest £530 million in its wafer fabrication plant in Livingston, bringing the total number of employees to 1,370. Of course, there is not a word of criticism from the hon. Member for Livingston (Mr. Cook) about that inward investment from Japan. Black and Decker now has the largest power tool plant in the world, which happens to be located in the constituency of the right hon. Member for Sedgefield (Mr. Blair), the Leader of the Opposition. Again, there is not a word of criticism of that. In June, Honda of Japan announced its decision to invest £330 million in its plant in Swindon. Tatung of Taiwan has expanded its Telford plant and it currently employs about 500 staff. I have already referred to Samsung's significant announcement last week.
Inward investment has had a significant impact along the length and breadth of this country. Hardly a town or county anywhere in the United Kingdom has not benefited either directly or indirectly from inward investment. I am delighted that, for the first time, London now has an inward investment agency, the London First Centre, for which the Government have provided a grant of £500,000 this year. Before that centre is fully established, it is handling more than 100 inquiries, many of them in the manufacturing sector.
That impressive, unparalleled list of success stories is a testimony to the excellent and continuing work of the Invest in Britain Bureau and of our overseas posts. I pay tribute to the work of the Foreign and Commonwealth Office on behalf not only of the promotion of exports but of inward investment.
We should not forget, as we consider more recent inward investments, companies that have been established in this country for many years. I refer to well-known companies such as Ford, Vauxhall, IBM, Nestlé, and Proctor and Gamble. Many British citizens might be surprised to hear of their being examples of foreign companies investing in the United Kingdom, because many such companies are regarded as for ever having been British.
That matter goes to the core of the Government's attitude. Once overseas companies come to the United Kingdom, they are not foreign companies; they are British companies that happen to have foreign owners, and we shall fight for those companies in international forums as hard as we fight for directly British-owned companies. We will have no criticism from Opposition Members or from trade unions in particular, which demeans the value of jobs in the United Kingdom because those jobs happen to be created by companies that are domiciled overseas.


We should not forget that investment is not just a one-way street. We are part of an increasingly global economy. We cannot afford simply to assume that the world and its businesses will come to the United Kingdom. We must accept also that many of our most succesful companies will want to invest overseas. By value, we are the world's largest overseas investor after the United States of America. Just think of British companies that are world leaders: British Airways, British Gas, National Power, PowerGen and Thames Water, to name but a few. What have all those companies in common? It is no accident that prominent among British outward investors are companies that have only recently been freed from the shackles of state control as a result of our successful privatisation programme.
We should not forget that the United Kingdom is the second biggest investor overall in the United States and the biggest investor in the manufacturing sector there, with investment valued at more than $40 billion. Indeed, some of the great trade names in the United States are under British ownership—everything from the Jolly Green Giant to Smith and Wesson.
Investing in the United Kingdom is popular, as we have seen from the statistics, because of the advantages that we offer. Above all, we offer a Government who are committed to creating a commercial environment in which business can flourish and grow. We have one of the lowest rates of corporation tax in the European Union. Our personal tax rates are low, thereby allowing people to work hard to progress and to look after their families. We have no foreign exchange controls. Our labour costs are highly competitive—in some cases, they are half those of Germany. We have an able and willing work force who are ready to learn new skills, to adapt to new production processes and to work flexible hours with rostering, which allows production 24 hours a day, seven days a week.
Only last Monday, I visited Fiat's New Holland tractor plant at Basildon—another example of successful inward investment. That factory had a very successful year in 1994. I asked management why that plant was so competitive. The answer was unequivocal: good labour relations and a flexible work force. Let me spell it out—average overtime at the plant this year has been 40 per cent. I talked to several people working on the production line and asked them whether they welcomed that overtime. Unequivocally, they said yes. They welcomed the opportunity to work long hours, to bring benefits to themselves and to their families. Of course, if we had been part of the social contract, they would have not been able to work those hours. They would have been limited to a maximum of 48 hours a week. Many of them were doing between 55 and 65 hours a week, week in, week out.

Mr. Denis MacShane: indicated dissent.

Mr. Eggar: The hon. Member for Rotherham (Mr. MacShane) shakes his head. He wants to deprive individuals of the ability to choose the number of hours that they work. Oh no, the hon. Gentleman knows best. He will determine the standard of living of those workers in Basildon. He will not give them the opportunity to decide for themselves. However, it is much more serious than that. The hon. Gentleman would deprive that plant of its ability to compete worldwide. He would deprive that plant of its overriding competitive advantage over any

other plant within the New Holland group—that is, its flexibility, its responsiveness and the commitment of the work force and of management to maintain that competitiveness.
The hon. Gentleman sits back and smiles. I just hope that potential overseas investors in the United Kingdom do not pay too much attention to his smiles, because they send one message to them: that, if the Labour party ever formed a Government, they would deprive Britain of a major competitive advantage that the Government have given British business men by sticking strongly to our views and being prepared to do so against opposition from other European Union countries.
There is more, of course, and the Opposition do not like it. United Kingdom strike rates in the past two years were the lowest in Europe since records began 100 years ago. Ours is the only western European economy in which unemployment is falling. All that has been achieved against a backdrop of falling inflation. Britain recognises that price stability is essential to encourage businesses to plan and to invest. That is why the Government are determined to keep inflation low, and it is why underlying inflation is at its lowest for 25 years and has been under 3 per cent. for 12 consecutive months.
One of the great strengths of our inward investment record is the breadth of the companies that have chosen to establish not only manufacturing but their research and development facilities in the United Kingdom, and we attach great importance to that. Companies that have recently either come here and established research and development facilities or expanded existing facilities included Canon, Sony and Pfizer. Indeed, more than 100 Japanese companies have research and development facilities of different sizes in the United Kingdom. They have come here because the United Kingdom has long been renowned for scientific innovation and the quality of its research.
The Government have actively sought to assist companies in identifying suitable research areas, partners and sites, and we have helped inward investors and foreign companies to forge links with British research institutions. It is vital to the continuing competitiveness of the United Kingdom economy that we work closely with foreign companies and with our great research institutions to the benefit of us all.
There is another factor. It is well known that industry in the United Kingdom is not burdened by unnecessary rules and regulations. It is well known that where problems have been created for one reason or another, the Government will do everything that they can to sweep away those rules and regulations. It is also well known that the Government believe that it is business men who know best how to run their businesses, and that working practices should be settled between employers and employees without the heavy-handed intervention of local or central Government.
All those factors have been crucial to the commercial decisions of foreign investors when they come to set up their businesses in the United Kingdom. However, there is another important reason why they have come to the United Kingdom. They are confident that they will be welcomed here because the Government's policy over the past 15 years has been clear and consistent. We want foreign investors to come to the United Kingdom and we shall do what we can in what is an increasingly competitive world to ensure that they locate here.


Sometimes, our assistance to foreign investors requires the judicious use of financial incentives such as regional selective assistance to tip the balance in our favour. Of course, the whole RSA discretionary procedure is preferable to the indiscriminate handouts that were exemplified by regional development grants.
It is not only the creation of the right climate for inward investment that has brought about success. We need support for companies that can genuinely show that they will introduce long-term, quality employment to this country. Companies such as Nissan have not only created valuable employment directly but helped to transform the United Kingdom auto supplies sector. Compare that with the inward-looking, let-us-prop-up-anything-anywhere policies of the previous Labour Government. People should not forget that that Government devoted all their skills—that is, the skills of the previous Member for Bradford, South, the late Bob Cryer—to supporting failing companies, rather than encouraging successful ones.
We have made every effort to ensure that the process of setting up in the United Kingdom is as easy as possible, and that investors have quick access to the best advice that is available internationally. That commitment continues. It does not stop at the point at which investors have established their operations in the United Kingdom. We have built up an after-care programme that is designed to ensure that investors are fully satisfied with their operations in the United Kingdom, and that they are taking the best advantage of the benefits that the United Kingdom has to offer with regard to additional services for expansion, changes in manufacturing processes and so on, in response to market changes.
In other words, we want to see businesses flourish and prosper, and we shall do all that we properly can to help them succeed. They will continue to flourish and prosper as long as the United Kingdom Government follow the policies that have brought about our great success over the past 10 years. Central to those policies is our membership of the European Union.
There are some who claim that membership of the European Union has brought no tangible benefits to this country. The success of our inward investment programme is strong evidence to the contrary. Inward investment has created jobs, boosted our exports and spread best practice around our manufacturing industries. Much of that inward investment would not have come to the United Kingdom if we were not whole-heartedly committed to membership of the European Union. Foreign companies know that, by investing in Britain, they have access to the European single market and, with it, the 340 million consumers who form the largest single market in the world.
By coming to Britain, inward investors get the best of both worlds: access to the single market and a competitive commercial environment, while at the same time they are exempted from the clinging aspects of the social charter. Does anyone seriously suggest that we should have been as successful as we have been in inward investment without our membership of the European Union and without access to that single market? I do not think that any business man in the United Kingdom who has been associated with major inward investment decisions would suggest that for a moment.
Being in Europe does not mean accepting without question every measure that is proposed by our partners or by the Commission. As I said, the opt-out from the

social charter proves that. The Commission's view is clear. It was Jacques Delors who remarked that the social charter opt-out makes Britain a paradise for foreign investment. Outside Europe, we should not be a paradise; we should be an irrelevance. Not all of our advantages flow from membership of the Union, but many of them in terms of the market do. Our inward investors know that they will also benefit from the transformation in the British supply side over the past 15 years.
Apart from the labour flexibility that I mentioned, inward investors also want access to our excellent academic institutions. They want to operate in a country that speaks English, and they want to enjoy the support of a Government who are committed to the success of business.
One of the most influential magazines on inward investment, Corporate Location, revealed last week the results of a major survey that showed that Britain is now the world's favourite location for inward investment over the next two years. Would that remain the case if we did not provide inward investors with access to the single market? Of course, it would not.
I have been speaking for almost half an hour. We had a Neanderthal wing of the Labour party shaking its head. [Interruption.] My hon. Friend the Member for Derbyshire, South should save her sympathy for someone else. There was no dissent as I listed the successes of our inward investment programme. We must ask about Labour's policies.

Mr. Nigel Waterson: My hon. Friend has only two minutes left.

Mr. Eggar: If I listed Labour's policies, I am sure that I should not be speaking for as long as two minutes. To coin a familiar phrase, the Labour party would be tough on inward investors and tough on the causes on inward investment. The Labour party has no real commitment to the success of business. It would rather strangle companies with the disastrous implications of the social chapter, which Opposition Members so readily embrace. We have seen evidence of that already this morning.
Do not let us delude ourselves. International companies would not be willing to locate in the United Kingdom and create thousands of skilled jobs if the United Kingdom allowed itself to be held back by the anti-business attitudes that are so endemic in the Labour party, by its belief in the social chapter or by its commitment to minimum wage policies. Such policies are enthusiastically espoused by the Labour party, but they would do so much damage to our competitiveness.

Mr. John Gunnell: Will the Minister give way?

Mr. Eggar: No, I will not give way. I shall think about it in a minute or two.
Much as the new leader of the Labour party would like us to believe that there is a new Labour party as well as a new leader of the Labour party and would like to deceive the country into thinking that his party embraces the logic of open, free and competitive markets, we need to do only a very little digging to realise what his party really stands for.


Only two years ago, when the hon. Member for Livingston was the leading Opposition spokesman on trade and industry, he pointed out at a Tribune rally that opinion polls showed that 31 per cent. of British people thought that
more socialist planning would be the best way to solve Britain's economic problems".
He picked out that statistic. That is all right, but then he made his intentions absolutely clear. He said:
How many people have they heard making the case for socialist planning of the economy? If we can almost get a majority without even trying, just think what we can do if we are confident and really give it a push."—
"it", of course, being socialist planning.
That quotation is not my invention. It comes from an excellent paper that I can recommend to hon. Members on both sides of the House. It comes from Fabian Review, volume 105, No. 3, from an article written by the hon. Member for Birmingham, Selly Oak (Dr. Jones), in which she quoted her hon. Friend. No Opposition Member denies—[Interruption.] The hon. Member for Middlesbrough wants to know when the hon. Member for Livingston said that. What he means is, "Oh dear, our marketing experts have not picked that up. I had better get the references. In any case, now that my hon. Friend the Member for Livingston has moved on to foreign affairs"—because he is a little dangerous and wayward when he speaks on the real world and the real economy—"perhaps we shall be able to rewrite or modify the quotation. Perhaps the wizards down at Walworth road will be able to rephrase it."
I have given the hon. Member for Middlesbrough the reference. There is no doubt about it. He ought to refer to the hon. Member for Selly Oak. She wrote the article. Presumably she checked that the quotation from the hon. Member for Livingston was accurate.

Mr. Stuart Bell: On a point of order, Madam Deputy Speaker. We know that the Minister is erroneous in most of his speech, but he could do my hon. Friend the Member for Birmingham, Ladywood (Ms Short) the courtesy of ceasing referring to her as the hon. Member for Birmingham, Selly Oak.

Madam Deputy Speaker (Dame Janet Fookes): I am sure that that point is taken.

Mr. Eggar: I am not sure whether the hon. Member for Middlesbrough knows the members of his own party. Would the hon. Gentleman like to withdraw the assertion on a point of order?

Mr. Bell: The remarks seemed to be those of my hon. Friend the Member for Ladywood. It may be that my hon. Friend the Member for Selly Oak made similar remarks.

Mr. Eggar: Now I see. The hon. Gentleman was prepared to dismiss the remarks if they were those of the hon. Member for Ladywood. She is one extreme of the Labour party, so she can be dismissed. Then it turns out that they were the remarks of the hon. Member for Selly Oak. The hon. Gentleman has now succeeded in offending two hon. Ladies in his party. There is a certain amount of sexism around here. I thought that the new Labour party

was all about equality between the sexes and promoting the role of women—something of which I am sure you are in favour, Madam Deputy Speaker.
In one intervention—indeed, his only intervention so far during the debate—the hon. Member for Middlesbrough has knocked a couple of women aside. But that is the real voice of the Labour party. That is the north-east of the Labour party speaking, just as it was the real voice of the Labour party speaking when the hon. Member for Livingston, who was then the main Opposition spokesman on trade and industry, extolled the virtues of socialist planning. [Interruption.] Oh dear, the hon. Member for Middlesbrough had not even worked out that the hon. Member for Selly Oak had been a Member of Parliament for the past two and a half years. I should have thought that he would be delighted. This is bizarre. If the hon. Gentleman shows the same quality of research when he talks about trade and industry as when he analyses the membership of his parliamentary party, God help us.
We have had a little fun and a bit of knockabout, but behind it is a critical point. Large numbers of international companies have invested in the United Kingdom to the enormous benefit of our economy and employment because the Government have set out deliberately to create a climate in which inward investors know that they will be welcome and will be supported by the Government.
What do the Opposition want to do? At a time when NEC has created 500 jobs in the constituency of the hon. Member for Livingston, when Black and Decker has located all its manufacturing in Europe in the constituency of the hon. Member for Sedgefield, when the hon. Member for Middlesbrough knows full well that many hundreds of his constituents will be given employment by Samsung, the Labour party is making a great call to international investors. It is saying, "We, the main party of opposition in the United Kingdom, believe in socialist planning." I hope that that message gets across.
I look forward to hearing what the hon. Member for Middlesbrough's version of socialist planning is all about. I am sure that he will have discussed the matter at considerable length with the hon. Member for Livingston.

Mr. Stuart Bell: My first advice to the Minister is that he should keep taking the tablets. They obviously do him a world of good. He is in fine form and fine fettle this morning. We welcome his speech. [Interruption.] The hon. Member for Chelmsford (Mr. Burns), who is now in the Whips Office, says that it was a fine speech. We certainly give him credit for that.
It was interesting to imagine that the ragged-trousered philanthropist was alive and well in Basildon when the Minister visited a Fiat factory and talked to the work force. He was told that working a 48 or 60-hour a week was a fine way of earning a living. That simply reflects the other side of the coin.
Where work is concerned, many years of Conservative government have resulted in a three-layer society—those people in work with highly paid jobs, who have to work for 48, 50 and 60 hours a week, those in lower-paid jobs, who have to work extremely hard, and those with no jobs at all.



The Minister was talking about inward investment, but uncertainty, vulnerability and insecurity are building up throughout the country. Opinion polls often ask, "What is your greatest worry?" The answer is, "That I will lose my job." The Minister therefore should not take too much credit for being part of a team who created such uncertainty from one end of the country to the other.
The Minister also referred to Neanderthal man, and we wondered who he was talking about. We all plead. not guilty to being Neanderthal today. His evidence from the Fiat factory was anecdotal. Lord Howe visited the factory floor before the 1979 election and was told, "We want lower taxes." The Government thought that they were obliging by reducing the rate of income tax, increasing value added tax and increasing the burden on each worker. Anecdotal evidence might be helpful to the Minister, but it is certainly not a basis for building a policy, and intend to go through various aspects of that policy.
The Minister mentioned rules and regulations, but he was forgetting who created them. There are four times as many now as there were in 1979, and Conservative Governments are responsible for that fourfold increase. In 1979, the President of the Board of Trade made a name for himself by getting rid of quangos, but he may have to start all over again and get rid of all the quangos created during the Conservative years.
As for the Labour party having an anti-business approach, the Minister will remember that the late John Smith made the best speech at the Confederation of British Industry conference last year. He got more applause than was ever given to a Conservative Minister. Also, there were more Labour Members of Parliament at that conference than ever before, and as many Labour Front-Bench spokesmen as Ministers of the Crown.
The Minister says that unemployment is falling here compared with other European countries, but that is due to the benefits of devaluation, which was forced on the Government in 1992. We accept that the rate is falling, and we want that decrease to continue, but it is not a good criterion for comparing our economy with those of other European countries where the exchange rates are stable, which are part of an exchange rate mechanism and which are tackling the unemployment problem in their own way and achieving results.
The Minister for Energy and Industry made a fine Friday morning speech. Lloyd George made his name with Friday morning speeches, and I wish the hon. Gentleman well on the same route.
Since there have been many references to Samsung this morning, I must say that, as a Cleveland Member of Parliament, I welcome that inward investment. Since it is a Friday morning and we can wander a little from the subject, although not too far, I might say that the fact that Samsung has chosen the Wynyard estate in Cleveland has some interesting historical parallels.
The estate was the seat of the Londonderry family. The Londonderrys understood the significance of Seaham for the embarkation of coal destined for London in the last century—it cut the cost of sending coal to Sunderland for shipment. They built the harbour there and established their family home. A century and a half later, the coal owners were bought out by a pitman's son.
Among the many achievements, of Sir John Hall—whether in regard to the Gateshead Metro centre, Newcastle United football club, getting Mr. Kevin Keegan

from the golf courses of Spain or even Mr. Andy Cole from a London football club—the most striking is that a pitman's son bought the coal owners' family seat.
In Cleveland, we welcome that investment, because we need it after 15 years of Conservative government, during which one steel mill has gone, although the other is still there, 80-odd foundries have closed, our coal mines have closed, the chemical and petrochemical industries have been reduced, our shipyards have closed and we have lost many jobs. They have been lost to people in work, and to their children who were seeking work. Ayresome park, the local football stadium, could be filled three times over with the unemployed.
There are many reasons why Samsung and other such companies have chosen our shores for their investment and the Minister touched on some. Notwithstanding the vicissitudes of the past few years—two recessions, both Government-induced—we remain a manufacturing nation in the eyes of the world. No matter how often the Government placed the emphasis on services—they did so in the 1980s with Lord Lawson—or attacked the industrial base of the trade unions by trying to make manufacturing more difficult, the outside world still looked upon us as the pioneers of the industrial revolution and as a country worthy of investment.
That has been the case under Labour as well as Conservative Governments. The hon. Member for Orpington (Mr. Horam) will remember from his years as a member of a Labour Government that we had such inward investment, and that it was as successful as inward investment under the Conservatives.
The Minister suggested that the Labour party somehow criticised that inward investment. He said that the trade unions had also done so. Opposition Members have always taken the view that successful industries abroad should export their capital here, rather than their unemployment, and that they should manufacture here rather than simply export their products to this country, It is better to build locally than to import nationally, as I have no doubt the hon. Member for Derbyshire, South (Mrs. Currie) will point out when she speaks, should she catch your eye, Madam Deputy Speaker. It is better to build a strong local economy out of which a strong national economy will grow.
At the turn of the century, we made warships for the nations of the far east on the River Tyne. Now, on a 200-acre site at Wynyard in the Durham landscape, we shall be making 1 million computer monitors, 1.3 million microwave ovens, 250,000 facsimile machines, 150,000 personal computers, and 3 million monitor tubes, eight-inch semi-conductor wavers and colour televisions. They are not all for the same household, the same family, or even the same country—many are for export. They are a clear reflection of the different age in which we live. We have turned swords not into ploughshares, but into computers and modern technology.

Mr. John Horam: The hon. Gentleman is going on at great length about manufacturing, and was making some points about the last Labour Government. He will remember that, despite some inward investment, that Government ceased to arrest the decline of United Kingdom manufacturing as a proportion of world trade. Conservative Governments during the past 15 years have done precisely that. For the first time in 50 or 60 years, United Kingdom manufacturing has ceased to decline as


a proportion of world trade and has stabilised. Purely on the manufacturing front, that is an achievement that Labour Governments never managed.

Mr. Bell: I welcome the hon. Gentleman's intervention, but he should have mentioned that manufacturing declined consistently until the last two years of Conservative government. We had 13 or 14 years of decline. He says that we have now arrested that decline, but he should look at what our competitors are doing.
The French have not only arrested the decline, but improved their share of world trade. If we compare ourselves to the French in manufacturing, we will find that we are behind them. The Government do not like that comparison, but I am making it. We are still losing ground compared to our competitors. It would not be acceptable to us simply to stand still after 15 years in government.
The hon. Member for Orpington (Mr. Horam) referred to a number of issues, such as wage rates and the social chapter. The President of the Board of Trade was in Seoul recently when the announcement was made, and he added his own political spice when he said that Samsung had been attracted to the United Kingdom by our competitive wage rates, without the social chapter. He did not say, of course, that Samsung had been in the United Kingdom for 10 years before the social chapter was ever dreamed of. He did not say that the company's sales had gone up by 100 per cent. before Maastricht and the social chapter were ever debated.
In fact, the reasons given by the President to the Seoul correspondent of the Financial Times, John Burton, were more appropriate and exact. The right hon. Gentleman explained that the reasons why the United Kingdom had been selected included labour productivity, infrastructure, the Koreans' familiarity with the English language, and the previous success of Korean operations in the United Kingdom.

Mrs. Edwina Currie: Is it not true that the social chapter did not apply in this country when Samsung came here 10 years ago, whereas large amounts of it applied—and have long applied—in the rest of Europe, and particularly in countries which could match the requirements of Samsung, such as Germany?

Mr. Bell: There has never been any evidence that Samsung came to this country because of less social provision. I also think—I sure that the hon. Lady is not wishing to do this—that it is a great insult to firms such as Samsung to say to them, "Come to our country: the wages are low, we have no minimum wage and we do not have proper social provision."
We in the north-east are not coolie labour, nor slave labour. We have a highly skilled work force in our area, to which the Minister has paid a certain respect in his statements. A firm such as Samsung would have some resentment at the suggestion that it was coming here because of social conditions and wages. The company has never said that in any statement which it has put out.
One of the reasons stated by the President of the Board of Trade why Samsung wished to come to our country was the previous success of the Korean operations in the United Kingdom. The President did cite, as I said earlier, that Samsung's choice was supportive of the United Kingdom's decision to opt out of the European Union

social chapter so that it could offer competitive wage rates. But the right hon. Gentleman moved quickly, and did not hang around on that point. He said that Samsung found the United Kingdom an attractive place to invest because of our membership of the European Union. The Minister has referred to that, and I shall come back to it later.
The UK is also an attractive place to invest because of our selective regional assistance. I found it strange—as I am sure did the House and those who follow business—that, in July this year, when the President of the Board of Trade was telling the country how well we were doing with record levels of inward investment, he was being undermined by the former Chief Secretary to the Treasury, now the Secretary of State for Employment, who was writing to express his disappointment that the President of the Board of Trade, in his report on the fundamental expenditure review, had not gone far enough.
That was rather interesting because, at the time, the President said that almost 100,000 jobs had been created by or linked to inward investment in the United Kingdom. He said:
These are tremendous figures. Thousands of people are at work today because of our success at attracting inward investment. But we will not rest on our laurels. We will need to keep on fighting for every project.
At the same time, the former Chief Secretary said:
I see no strong case for retaining regional selective assistance".
The President added:
Once again the United Kingdom has proved to be a favourite location for the inward investor".
The former Chief Secretary then said:
I believe we need to distinguish carefully between enhancing business competitiveness and getting embroiled ourselves in a competition with foreign governments to pay market distorting subsidies … Much of our regional spending runs this risk".

Mr. Waterson: Was not the hon. Gentleman in the House 10 days ago, when my right hon. Friend the Secretary of State for Employment made it clear that he had never opposed selective regional assistance as such, but merely required that it be justified?

Mr. Bell: There are many ways of interpreting that, but I have quoted from the letter as it was printed, and the statements have never been denied.
I shall continue with my case, because the former Chief Secretary went further on the question of regional selective assistance. When the President of the Board of Trade was telling us in July that the number of projects was also at a record level–404 new or expanded operations—we also received the letter from the former Chief Secretary talking about market solutions.
We must give credit—and I do—to the President of the Board of Trade for the fact that, when he was negotiating through his Department to bring Samsung to these shores, he perceived no free market disciplines in the minds of the French or the Spanish, who were equally trying to get the business. They were offering a package of incentives, grants and soft loans to bring the business to their countries.
Turning to the intervention by the hon. Member for Eastbourne (Mr. Waterson), I shall again refer to the annexe to the letter of the former Chief Secretary to the Treasury. He said that he saw no strong case for retaining regional selective assistance. That was in the annexe of the letter, and has never been denied.
That was not in the mind of the Secretary of State for Scotland this week when, at Scottish Question Time, he said that the regional selective assistance schemes should and did operate on a level basis across the whole of the United Kingdom, subject to standard criteria.
The Minister, who made a strong and interesting speech today, said on "The World At One" at the time of the Samsung announcement:
We have got to line in the real world and the real world is that major investment decisions of this kind inevitably involve a level of government assistance".
I was glad to see that the present Chief Secretary yesterday suggested that he would throw his weight behind the regional selective assistance schemes. He said that, in terms of inward investment, Britain was doing well and was
attracting the lion's share of foreign investment into the European union—far more than France and Germany combined."—[Official Report, 27 October 1994; Vol. 248, c. 1000.]
We may be getting a hint from the Chief Secretary that he is supportive of the regional selective assistance schemes—much more supportive than the former Chief Secretary. But that gives us some difficulties.

Mr. Eggar: If, at the end of his five-minute analysis of apparently leaked letters, the hon. Gentleman believes that there is nothing in the issue and that the Government remain—as they do—committed to regional selective assistance, why has he sought to make these points? Why has the hon. Gentleman sought to try to imply that regional selective assistance is in some way under threat?

Mr. Bell: The Minister, in his usual perceptive way, has understood the particular drift of my speech. [Interruption.] It is better to drift and arrive safely than to plough on like a speedboat.
The essence of my speech is that a former Chief Secretary does not believe in regional selective assistance and has written that in a letter, while the President of the Board of Trade says he does believe in it. The Government wonder why it is that they are not comprehensible to the British people, and why business does not understand them too well. There is a feeling—if I may use the word again—of drift in the Government, because two members of the same Cabinet have different views on the same subject.
We will not allow the Government simply to come to the Dispatch Box today with a spectacular scenario of success on inward investment, without revealing the deep rift within the Government, not only on the question of regional selective assistance, but on Europe. As it is half-term, we can throw these matters into the ring. The former Chief Secretary and the President of the Board of Trade have different views on the same subject. They have different views on Europe and different views on regional selective assistance—
Back to back they faced each other, drew their swords and shot each other.
That is the essence of what the British Cabinet is about and how the public perceive it.
The Minister was correct to anticipate my point that the confusion in the heart of government is so profound on the central issue of regional selective assistance that it is hardly surprising that the public think that the Government have lost their way.
We have already referred today to the social chapter opt-out and how the Labour party wants to reduce hours of work and overtime. The fact is that the social chapter is not of the slightest significance in inward investment decisions. Indeed, even at this stage it is quite clear that the opt-out will not survive the intergovernmental conference in 1996.
Companies inwardly invest in Britain to gain the benefits of the European Union. It is called looking ahead and forward planning. They know and understand that a Labour Government will sign up to the full social chapter. [Interruption.] Conservative Members can nod their heads sagely and say that there will never be a Labour Government, but they are living in the same cloud cuckoo land as the Government.
The Minister has referred to Samsung. Can he tell us what clause there is in the agreement with that company—or, indeed, any other inward investor—that would allow it to opt out of its investment when a Labour Government take office? What clause says that such companies can take their money out of Britain and withdraw their facilities and products? Where does it say that, when the Labour Government sign up to the social chapter, those companies will draw stumps and leave our country?

Sir Michael Grylls: The hon. Gentleman says that the only reason why foreign companies come to Britain is the European Union, and that it has nothing to do with labour and social costs. Why, then, are so many German firms coming to Britain?

Mr. Bell: The Government, with the help of the City of London, are not prepared to give the same long-term investment and support to such companies as, for example, Land Rover, which was then bought by BMW. The reason is that simple.
In fact, I did not say "only reason"; I also said that such companies came to Britain because of our traditional manufacturing base—we are the pioneers of the industrial revolution —and because our work force have the skills, discipline and commitment required. The Government would do themselves a political favour if they ceased to try to gain some advantage from the fact that Britain has opted out of the social chapter. No firm coming to our country has ever said that it was doing so because of our lack of the social chapter and a minimum wage.
Commissioner Padraig Flynn this week called for equality of action and minimum standards in the workplace. He said that that would apply in every part of the European Union. The Eropean Commission, which does not always have the support of those on the Treasury Front Bench, has found no evidence to support the Conservative view on the social chapter. It says that Britain's non-participation has little or no bearing on decisions by multinationals on whether to open plants in Britain.
What the Commisision's analysis does show—the Minister touched upon it—is that Britain's attraction lies in the quality of our physical and communications infrastructure, the availability of skilled labour, and the scale of regional development grants. Those are the points made by Samsung.

Mr. Eggar: Taking what the hon. Gentleman said at face value, he and the Commission are paying tribute to the Government's policies over the past 15 years that have created such competitive advantages. Is he saying that the


Commission is specifically disavowing Jacques Delors's statement that the social chapter opt-out meant that Britain would be a "paradise" for foreign investment?

Mr. Bell: I have no idea of the context in which Mr. Delors made that statement, but it is palpably false to say that Britain, rather than France or the other countries in the EU, is attracting investment because of our opt-out. In fact, global inward investment in France is greater than in Britain. Britain is an island, but no man is an island entire of himself. The Minister painted a distorted picture—a laser beam. We shall put the proper picture on the record today.

Mr. James Clappison: Perhaps the hon. Gentleman should send a copy of his speech to the Labour spokesmen on education, transport and Treasury matters. It is a tribute to the Government's education policies, to investment and infrastructure and to the growth that has enabled all that to happen.

Mr. Bell: The hon. Gentleman is wrong. I shall answer his point later in my speech, because I had anticipated that it would be made.
The subject today is inward investment. The Minister referred to outward investment and said how powerful and strong Britain was in the world. The fact is that, from 1981 to 1990, Britain's outward investment was $55.2 billion greater than its inward investment. That was the pattern throughout the 1980s, when the United Kingdom invested overseas on the same scale as Japan and the United States, even though the size of our economy was smaller. The average investment abroad was 3.1 per cent. of our gross domestic product. In 1992, Britain received 11 per cent. of global inward investment and was third behind France and the United States.
The greatest flow of investment came in the run-up to the single market. As the Minister confirmed, that run-up had the most significant impact on inward investment, with £17.4 billion coming into Britain during that year. The figure for 1993 was £9 billion.

Mrs. Currie: I hesitate to accuse anyone of the hon. Gentleman's distinction of massaging statistics and being selective. However, I refer him to the Library research paper 94/100, published on 25 October, which states:
In 1993"—
a heck of a lot more recent than the period the hon. Gentleman is quoting—
in common with most recent years other than 1992, the UK was host to more inward direct investment than any other EU member state.

Mr. Bell: In the years to which I have referred, Britain was third. Inward investment in France was significant. The hon. Lady has not made the distinction between

manufacturing and financial services. Financial services are not included in that document. If she adds financial services—

Mr. Eggar: The hon. Gentleman is scraping around and knocking Britain.

Mr. Bell: I am not. We resent the notion that only the Conservatives are cloaked in patriotism; that only the Conservatives can have a perspective on our country, on its direction, on business and on investment.

Mr. Peter Ainsworth: It is a strange perspective to choose the worst year out of the past 15 on which to build a case. The hon. Gentleman implied that outward investment was not good a good thing. Does he understand that we earn a return on that investment? Can he clarify his position on that?

Mr. Bell: The figure which the hon. Member for Derbyshire, South (Mrs. Currie) gave was assisted by the devaluation of the pound, which was a great help to us. The hon. Member for Surrey, East (Mr. Ainsworth) makes his point some nine years too late, because the same point was made by Mr. Stefan Terlezki in this House in 1985, when he said that the return on our investment at that time was some £5,000 million a year. The balance of inward and outward investment does not tilt in our favour, because we are sending more money abroad than we are getting back into the country. That is the point that I am trying to make.
In any event, during the 1980s the flow of investment between states greatly increased. Foreign investment by companies based in the 24 member states of the Organisation of Economic Co-operation and Development has increased fourfold, driven by the increased globalisation of the world economy. Vast trading blocs have been created in the shape of the European Union, and now the North American Free Trade Area and the new bloc—organised, structured and coherent—developing in the so-called Pacific rim.
Traditional industries throughout the whole of the European Union are in decline. All the states of the European Union have sought to attract foreign investment to areas where the decline has been steepest and unemployment highest. On the point made by the hon. Member for Surrey, East, we have continued consistently and persistently throughout all those years to send more money abroad than we have received. While we welcome inward investment, we cannot help but wonder how our economy would have fared if even half that money had been invested in our own country and we had not had to rely on others.
On the myth and shibboleth of a national minimum wage, how is it that the French and Americans do so well? Most inward investment is into the United States, and both countries have massive inward investment as well as a national minimum wage. Studies by the Japanese External Trade Organisation—a little more distant but much more succinct than the document turned out by the Library, which I do not criticise, as it was turned out at short notice for this debate—and by the French Government, show that labour costs are not a major determinant of inward investment.
Recent research by the International Labour Agency shows that local demand for goods and Government support for industry are as important as wage costs. We


have already seen that the main drivers of investment are the infrastructure and the availability of a skilled work force. Important as inward investment is for job creation, a coherent industrial policy is more important to job creation. The Labour party has studied in depth the book by the President of the Board of Trade, "Where There's a Will", in which he tried to create a coherent strategy. Whether he succeeded is open to doubt, and Labour Members certainly have their doubts.
I refer again to the wider picture of inward investment. Samsung has made a major investment in 200 acres of green and pleasant land around Wynyard and, last year, some 58 per cent. of our inward investment was in the form of acquisitions. In 1989, it was some 70 per cent. of all inward investment.
Is it not strange—this point was touched on briefly, but passed over quickly by the Minister—that foreign companies are prepared to invest in the skills of our work force, whereas the City of London is not? Our banks and financial institutions operate in the short rather than the long term, and those very institutions cannot see beyond the next takeover bid, thus inhibiting investment in our industries, which should be built up here rather than sold abroad.
The Minister will accept that not all inward investment is successful. The President of the Board of Trade certainly did at his last Question Time in July. Raytheon Jets in the constituency of my hon. Friend the Member for Alyn and Deeside (Mr. Jones) is closing less than 18 months after it was bought from British Aerospace. Incidentally, it is one of the most advanced production facilities in the aerospace industry.
Du Pont on Teesside is closing down the fibre business which it bought from ICI, with the loss of 520 jobs. Du Pont has made a substantial investment in our country, employing some 6,000 people, but the loss of the fibre business has been sad for those who had such high hopes when Du Pont took over the plant. The loss of those 520 jobs is in the here and now, and the 3,000 jobs that we expect from Samsung will come in 1998–99.
The Minister for Energy and Industry made a side swipe at his right hon. Friend the Member for Kingston upon Thames (Mr. Lamont). Although he did not mention him by name, we all knew who he had in mind. At a well-advertised fringe meeting at the Tory party conference, the right hon. Member for Kingston upon Thames declared categorically that he could not pinpoint a single concrete economic advantage that came to the United Kingdom from its membership of the Union.
The divisions within the Conservative party are profound when a member of the Government throughout the years leading up to the single market, who was aware of the massive inward investment consequent upon that single market, could make such a statement. One wonders how the Conservative party can continue to govern. It is three parties in one: partly pro-Ėuropean and partly anti-European; partly in favour of regional selective

assistance and partly not in favour. Divisions, schisms, doubts, uncertainties and incompetence run throughout the Government, including the Back Benches—

Mr. Eggar: The hon. Gentleman is smiling as he says that.

Mr. Bell: No, I am not.
We shall not allow the Minister of State to put forward a false argument, even though it may be Friday. What the former Chief Secretary to the Treasury, the current Secretary of State for Employment, did not understand—it was clear from his letter that he did not understand it—is that selective regional assistance not only enables the United Kingdom to compete but enables the worker, backed by investment, to show his skills.
The Government's greatest failure over the past 15 years has been to spread uncertainty from one end of the land to another. Even those in work now feel uncertainty and insecurity in their place of work.
Let us imagine someone working in Basildon receiving a visit from the Minister on the factory floor, like the Japanese general in the film "Bridge On the River Kwai". The Minister asks, "Are you happy at your work?" and the employee replies, "Yes, sir." He then asks, "Are you happy working 48 hours a week?" and the employee replies, "Yes, sir." He asks, "Are you happy working 60 hours a week?" and the employee replies, "Yes, sir." He asks, "Do you want the social chapter or a minimum wage?" and the employee replies, "No, sir, thank you, sir."
That is the ragged-trousered philanthropist philosophy which this Government have sought to inculcate in the land. The sense of vulnerability which they have created throughout our society has not made for a happy society.

Lady Olga Maitland: Will the hon. Gentleman give way?

Mr. Bell: No, I shall not. I am reaching the end of my speech. The hon. Member for Derbyshire, South is becoming a little concerned that I might continue a little too long and she will not be able to take credit for bringing Toyota to our country, so I shall try to wrap up as quickly as I can.
The hon. Member for Hertsmere (Mr. Clappison) spoke about the education system. It was not the Labour Opposition who sacked the Secretary of State for Education, but the Conservative Government. We want inward investment into our communications and infrastructure, and we want it in areas of social need, to create better homes, better schools and better hospitals. We want more private sector investment in this country, which is still held back by uncertainty about the future. All that needs to be borne in mind when we debate the narrow section of inward investment.
When the outside world looks at us, it sees an unstable and unbalanced economy. It also sees a Government who are leaderless, rudderless, witless and incompatible one with another. There is incompatibility between the Secretary of State for Employment and the President of the Board of Trade. There is incompatibility between those who are pro-Europe and those who are anti-Europe. The Government are unsure about the direction that Europe should take— whether it should be a free trade


area or a true union, and whether it should be a true market economy without intervention or one with intervention.
There is no selective regional assistance and no hefty push for our industries. The Government are a parody of themselves. They must spend too much of their time watching puppet shows on television because they act-like puppets. They are like characters out of "Spitting Image".

Mr. Eggar: Before the hon. Gentleman gets to the next 15 pages of his speech, will he tell us whether the Labour party is committed to planning, as his hon. Friend the Member for Livingston (Mr. Cook) appears to be, or not?

Mr. Bell: The hon. Gentleman should not incite me into reading the next 15 pages of my speech. I should hate to deprive Conservative Members who have been sitting here this morning of an opportunity to speak.
Planning and strategy are clearly a better way in which to look at our industry than the short-termism that we have seen over the past few years. We believe, of course, in long-termism. We believe in planning. We believe in the work force, and we believe in the work force having a say in the affairs of the companies in which they invest their working lives.
We believe in inward investment, but we shall have a coherent strategy for it all, rather than getting by on a wing and a prayer. At present, there is no fixed exchange rate for the pound, there is no certainty about inflation, interest rates are rising and there is no certainty for members of the public or the work force. We offer a great deal more reassurance than this Government have offered. Much to the relief—[Interruption.] I am happy to stay on my feet for longer if the Minister so wishes.

Mr. Eggar: I think I detected a commitment from the Labour Front-Bench spokesman to membership of a single European currency. Can he confirm that?

Mr. Bell: I am sorry, I did not hear that. Would the Minister repeat his question?

Mr. Eggar: I think that I detected from the Labour Front-Bench spokesman a commitment to a single European currency. Can the hon. Gentleman confirm that that is his position?

Mr. Bell: The hon. Gentleman should not be so sharp that he cuts himself. We shall look at the intergovernmental conference as it comes up. We have made a variety of observations on all that. We know that the opt-out clause will go at that conference. The movement towards a single currency will continue. My right hon. Friend the Leader of the Opposition has said that there may be a referendum on that subject, thus shooting the fox of the right hon. Member for Kingston upon Thames. We are clear about where we are going.
The Government are not clear about where they are going. For the Minister to come to the Dispatch Box today to vaunt a series of segments of inward investment, which we welcome, is no strategy and no economic policy. Not only do we know that, but the British public know that. If the Minister does not believe it, he should look at the latest opinion polls.

Sir John Stanley: I shall not follow the hon. Member for Middlesbrough (Mr. Bell) in occupying the Floor for almost an hour and managing to say almost nothing. However, I agreed with his generous tribute to the fine Friday morning speech by my hon. Friend the Minister. I parted company with the hon. Gentleman thereafter, not least in his attempt to suggest that there was some degree of comparability between inward investment under the last Labour Government and inward investment under the present Government. There is no comparability. I vividly remember the years 1974 to 1979, not least the decisions taken by the major American car manufacturers that were looking at Europe. They looked at Britain, at Belgium and at Germany and they gave Labour Britain the thumbs down time and time again.
As my hon. Friend the Minister said, what has been achieved in inward investment since 1979 has been a huge success story. It has probably been the single most dramatic and furthest reaching economic and industrial success story for any Government in the post-war period. The benefits to our country in terms of jobs created, in balance of payments terms and in terms of potential tax revenue from the companies that have set up here are profound.
It is instructive to consider the reasons why this country has been so conspicuously successful in attracting inward investment on a scale wholly unmatched in the post-war history of this country and unmatched by any other member of the European Union. The one point on which there seems to be agreement on both sides is that our membership of the European Community is essential in attracting inward investment. I share my hon. Friend the Minister's view that it is eccentric for anyone to suggest that our membership of the European Community has brought no tangible benefit to this country.
In my constituency, I need only look at the largest single employer, SCA, which is one of the leading Swedish paper manufacturers. As the House will know, my constituency is not in a development area with all the huge attractions of regional assistance. Nevertheless, SCA is making a £260 million investment in Aylesford, a decision that was critically helped by a £20 million grant obtainable from the Department of Trade and Industry, thanks to this Government. That investment was competed for fiercely by Germany and by the Netherlands, but it eventually came to this country. There is no conceivable way in which that £260 million would have come to this country if we had not been a member of the European Community. That position is mirrored throughout the country, in one constituency after another.
As has been said, our membership of the European Community is not the only explanation for inward investment. It clearly cannot be, because inward investors have 12 countries from which to choose. There must be factors peculiar to this country which explain why the overwhelming proportion of Japanese investment and American investment, and a great deal of Scandinavian investment, has come to this country in preference to other countries within the European Community.
As some hon. Members may know, I am heavily involved in the all-party groups in the House on Japan and on Korea. In that capacity, I have many opportunities to speak to Korean and Japanese companies, both in


Korea and Japan and in this country, that have made investment decisions to come here. I have found their responses extremely instructive. Although, of course, there is some variation in their responses, I have found that they have given four principal reasons, time and again, in answer to the question why they decided to come to the United Kingdom, which I always ask.
Grant availability, which was mentioned by the hon. Member for Middlesbrough, is not one of those four reasons. I agree with him that if the grants were not available, one could forget about investment. However, the availability of grant is not peculiar to this country. The grants are on offer elsewhere in the European Union, and, in some countries, the grants on offer may be even greater than those available in this country. One cannot say that availability of grants is one of the reasons.
The first reason that the companies give me is that on making their detailed analysis, they find that the cost base for an industrial manufacturing operation in this country is now extremely attractive and in most cases more favourable than that in any other country in the European Union in which they might want to make such investment. The cost base is critical in a highly competitive world and a highly competitive market, where every company is anxious about its costs. Due to the success of Government policy in reducing inflation and creating a competitive wage market and labour market here, and because the Government have been careful not to put unnecessary financial and fiscal burdens on companies, through our policies we have created that highly competitive cost base.
If the hon. Member for Middlesbrough wants to reply with jibes about a coolie market, I remind him that, alongside our huge success with inward investment, we have managed to achieve a marked increase in real disposable income in this country—significantly higher than it was under the last Labour Government. If the hon. Member for Middlesbrough wants to characterise our country as a coolie economy, all I can say is that it was a darned sight more of a coolie economy in the 1970s.

Mr. Bell: The right hon. Gentleman is making a good speech and I hope that he will not spoil it by rewriting history so quickly, within the space of minutes. I never said that we had a coolie economy. I said that countries which invest here do not do so because they think that we are a coolie economy. We would not accept—in the north-east of England or anywhere else—that it is because we are such a low-wage. low-skill region that other countries invest here. That is contrary to what the right hon. Gentleman is now saying.

Sir John Stanley: I listened carefully to what the hon. Gentleman said and we can both look at Hansard. I have certainly heard some of the hon. Gentleman's hon. Friends make jibes to the effect that we have turned Britain into a sweatshop economy. That has been said on many occasions. However, we can let the matter rest on what is said in Hansard.
The first reason why companies come here is the competitive cost base that we have established. The second reason that they give is that for the first time they have confidence in the stability and sense of our industrial relations legislation and industrial relations climate. There is no doubt that the profoundly important changes and reforms in industrial relations legislation have created a climate of confidence for inward investors into Britain which simply did not exist previously.
The third reason that companies give is that they have done their sums—as any company would do, particularly on taxes—and when they consider the tax position for companies in this country, including local taxes and corporation tax, they find that it is fiscally attractive to come here. The uniform business rate is now firmly pegged to increase no more than the rate of inflation. As my hon. Friend the Minister for Energy and Industry said, our corporation tax rate is one of the lowest in Europe. Those benefits flow directly from Government policies.
The fourth reason that companies give involves the language. There is no doubt that the fact that we speak English in this country is of profound economic and commercial importance to us. I believe that that is recognised in all parts of the House, as is the importance of supporting organisations such as the British Council which are in the business of promoting and expanding the use and knowledge of English around the world. Those four reasons are given again and again.
I have another worry, which affects the whole country. Although I am confident that the factors that are encouraging the utterly unprecedented and huge infusion of overseas investment into our country will continue under the present Government because present policies will continue, I am deeply concerned about the commitments that the Labour party has made. I do not think that it will make any changes relating to the use of the English language—I feel secure about that. But when I consider the other three factors, I see Labour party policies that will work directly against the confidence of inward investors.
The Labour party has made a collection of commitments, including commitments to the minimum wage and the social chapter, which is bound to trigger off a spate of wage inflation that will have a direct impact on the cost base. It will almost certainly be driven to place other social costs on employers that will adversely affect their cost base. When I consider the collection of Labour party policies, I can foresee only the surrendering of this country's critical advantage—a highly competitive cost base for industrial operations, which is probably the biggest single factor bringing inward investment to this country.
The Labour party's intentions on trade union relations are still extremely vague—indeed, worryingly vague. The Labour party conference passed a resolution stating that Labour would repeal anti-trade union legislation; that amounts to a blank cheque.

Mr. Bell: The right hon. Gentleman is once again rewriting history, although over a longer time span. The party conference passed no such resolution.

Sir John Stanley: I looked closely at the reports, but if I have misread them I will certainly withdraw my comment. I am in no doubt from the speeches that I have heard again and again from shadow employment spokesmen that the Labour party is committed to repeal elements of trade union legislation which are now on the statute book—the exact elements are so far unknown. I hope that the Labour party will take early steps to clarify which bits of the legislation it intends to appeal. Any attempt to take us back to the position under the legislation of the mid-1970s will greatly frighten inward investors and deter them from returning here. Clearly, negotiations will be taking place in the Labour party on the withdrawal of clause IV. I should be very surprised if


the hugely influential trade union element within the party does not exact its pound of flesh in return for the abolition of clause IV. We shall wait to see the detail of those policies.
If previous history is anything to go by, I see no prospect of the attractive rates of corporation tax surviving a change of Government in this country. There will be a substantial hike in corporation tax and the fiscal advantage that we offer inward investors will disappear. I am extremely worried about the continuation of one of the Government's most precious achievements, which is of profound importance not least to the regions that are heavily represented in Parliament by Opposition Members. I am worried that that priceless advantage could be surrendered if attempts are made to implement Labour party policies.
I warmly applaud the Government Front-Bench team on the achievement of the huge success story of inward investment. It is one of the signal achievements of the Government since 1979 and is of profound benefit to literally hundreds of thousands of individuals who have jobs, the security of good jobs and good earnings as a result of the inward investment that we have achieved. I am certain that my right hon. and hon. Friends will continue to ensure that that success story of inward investment survives.

Mr. Denis MacShane: It is a pleasure to follow the right hon. Member for Tonbridge and Malling (Sir J. Stanley) who, like me, shares an interest in and, I hope, a friendship with, the people of Korea.
The Minister asked for a definition of socialist planning. The right hon. Gentleman knows that Korea's great growth in the 1970s and 1980s came at a time when all the banks belonged to the state, all credit was allocated by the state and there was heavy investment in education. Korea now has far more PhDs per capita than we do. As a result, Korea has emerged as a leading industrial nation; in some sectors its workers earn more than their equivalents in the United Kingdom. I am not sure whether that is a form of centralised state, dirigiste planning of which I approve, but it is far from the failed economy theory being applied in this country. The core question is why, despite long years of inward investment—which started in the 1970s, when Sony and other Japanese companies established plants here under a Labour Government—it has not made our country richer. The UK has the highest rate of inward investment of any European country; yet since 1980 the average growth in gross domestic product was significantly below all our European competitors, let alone the new dynamic economies of Asia.
The World Development Forum based in Switzerland, which is not a socialist organisation, has just published its world competitive report, which ranks the UK 14th—significantly below Sweden, Norway and other partnership economies. According to the Office of Economic Co-operation and Development, the increase in GDP per capita between 1981 and 1991 was $6,663 in the UK. In Germany it was 25 per cent. more, in France 17 per cent. more and in Italy 13 per cent. more.
My hon. Friend the Member for Dunfermline, East (Mr. Brown), the shadow Chancellor, is mocked without mercy for his use of the term "endogenous growth theory". Soon after making that phrase the subject of international discussion at the Labour party's international economic conference last month, a distinguished colleague on the Labour Front Bench, who is not in the Chamber at present, told me that she had misheard the phrase as "erogenous growth theory" and had thought that, at long last, Labour was on to a surefire winner.
My hon. Friend the Member for Dunfermline, East was right. Nations that have focused on endogenous growth—that is, growth generated within the economy—have handsomely outperformed the UK in all the main indices of comparative international economic league tables.

Mr. Waterson: For the sake of completeness, does the hon. Gentleman realise that the hon. Member for Dunfermline, East (Mr. Brown) is also mocked for his prediction that unemployment would rise month by month, when the opposite has been the case?

Mr. MacShane: The mocking was about a choice of words. The English language is noble, and perhaps all that is left to us after 15 years of Tory misrule. I shudder when I hear Greek words such as "endogenous" creeping into national discourse.
Total inward investment between 1985 and 1990 was £64.9 billion. The UK's outward investment over the same period was £143 billion. In 1993, £9 billion came into the UK, but £17 billion left to be invested overseas. For every £1 coming into the country, £2 has left to create jobs in other nations. The standard of living and of investment of all British people has been held back and sacrificed to create a rentier economy in line with Tory exogenous or externally generated growth theory.
Inward investment has not helped to recreate the manufacturing sector that was destroyed in the early 1990s. The bulk of it has been in the primary and tertiary sectors—oil, trade and distribution, and financial services. I have figures only for the late 1980s because more up-to-date statistics were not available from the Library. They show that the percentage of inward investment in secondary or manufacturing sectors was higher in Germany, Italy and France than in the UK. Much was made of the investment in the north-east recently announced by Samsung, which we all welcome—but only this week, Daewoo announced a £600 million investment to build Korean cars in Romania, which is £150 million more than Samsung's investment in the north-east. That shows Britain in competition with Romania as a low-wage nation on the fringe of Europe as a target for Korean inward investment.
Although Japan is much talked about, Japanese investment in the UK is barely half that of Australia and one tenth that of the United States of America. Japanese investment represents only 40 per cent. of investment from European Free Trade Association countries. We must consider more than the dynamic Asian economies when identifying sources of inward investment.
The flow of inward investment from non-EC countries peaked after the setting in train of the single European market. Investment in the UK was made because we were part of the European Community and were committed in the mid and late 1980s to an integrated Europe. Since then, and despite the Minister's assurances, Government


policy has changed. Instead of opting into Europe, the Prime Minister proclaims his pride in the UK being the opt-out nation of Europe.
At the Tory conference three weeks ago, we heard from the platform and at fringe meetings the cry, "Europe, Europe, Europe—out, out, out!" The "Euro-septics", who are not represented in this debate, are the new Tory trotskyists before whom the Prime Minister must run. If they have their way, not only will the flow of inward investment dry up but the rest of Europe will take great pleasure in shutting out foreign-owned UK production from its current access to the European market.
As to the reasons why the Japanese and others invest in the UK, I cannot share the running order given by the right hon. Member for Tonbridge and Malling. Claims by Government spokespersons that foreign companies are attracted to the UK by its deregulated, low-wage, low-tax economy are not confirmed by any professional or scientific survey. In each case, the main reason given was familiarity with the English language and the fact that other linked companies were already established here.
Other reasons produced by the Government fall to the ground. As to low tax, another Library research paper, published in May, shows that in terms of the percentage of gross earnings less cash benefits to a couple with two children, the UK employee has a higher tax burden than his or her equivalent in France, Belgium or Austria. The UK tax burden in that category, which covers most managerial and skilled workers, is higher than the average for European OECD nations.

Mr. Peter Ainsworth: Is the hon. Gentleman aware that the UK's rate of corporation tax is the lowest of the G7 countries?

Mr. MacShane: My recollection is that the same research paper showed that tax on capital was 0.1 per cent. lower in 1990–1991 than in 1979. Exclusion from the social chapter is given as a reason, but that was not mentioned by any inward investing company. The peak flow of inward investment occurred prior to the Maastricht treaty.
The competition at world level for investment that developed in the 1980s is now so intense that we must find other ways to attract inward investment to the UK, rather than see it go to China, Latin America and eastern Europe. Reference was made to trade union legislation; yet the Japanese have sought out pro-active union agreements. It is sad that only the Opposition pay tribute to the partnership policies of the Amalgamated Engineering Union with Toyota and Nissan, and of the Transport and General Workers Union, the Manufacturing, Science Finance Union and the AEU with Rover, now owned by BMW. Those innovative union agreements are welcomed by the investing companies. I wish that the Government would pay greater tribute to the work of the unions in that respect.
Low pay may figure, and competitive costs were mentioned; yet two days ago the Secretary of State for Employment said at Harrogate that he wants a high-wage economy.

The Parliamentary Under-Secretary of State for Industry and Energy (Mr. Charles Wardle): Of course he says that.

Mr. MacShane: Of course he says that, says the Minister, but we cannot have it both ways: we cannot have a high-wage UK economy and at the same time offer low wages as a reason for investors to come to Britain.
I am not sure whether Labour Members should be pleased that the Secretary of State for Employment is now repeating the speeches made by the Leader of the Opposition and the shadow Chancellor, or whether it is merely another example from the Department of Employment of the tribute that vice pays to virtue. At any event, the proclamation that the UK is to become a high-wage economy will not play well in the board rooms of Taipei and Texas where investment decisions are being made.
The question of wages is significant. Thomson, France's biggest electronics company, is just moving all its factories out of high-wage Singapore into low-wage Indonesia. If we consider the cause and consequences of foreign direct investment, the role of Governments and Members of Parliament may be more modest than this debate suggests. One third of world output is now controlled by multi-national corporations. In 1993, there were 206,000 multi-national corporations around the world, compared with 3,500 just 30 years ago. One third of world trade now takes place within companies. They and not we are the new deciders of the world economy. That unaccountable power has grown, is growing, and needs to be balanced by a responsible, new world economic system based on a new Bretton Woods system and reforms in the world economic policy-making bodies such as the International Monetary Fund, the World bank, the OECD so on.
A new global social settlement is needed. If it is not achieved, we shall see the rise of nationalist and regionalist protectionism of the kind proposed by Sir James Goldsmith, the Italian fascists in the Berlusconi Government and other reactionary forces. The UK must again opt fully into the debate on the future of how we decide and regulate foreign direct investment. We have to avoid the problem that the United States has faced in paying out huge sums by way of tax breaks or even direct grants to companies and ending up with a net loss in state finances. Hundreds of thousands of dollars have been spent in America for each job.
The search for big-ticket investment, the giant projects, may be a mistake. The most successful state in America in attracting inward investment is Ohio, which has focused on seeking smaller firms based on intermediate or even low technology. I made notes for this speech using a pen handed out by British Airways at the Labour party conference. I am sure that they are available—[HON. MEMBERS: "Declare it."] It is not yet in the register. Where was this pen made? It was made in Switzerland, a country with wages 50 per cent. higher than the UK and a full employment partnership economy, yet one which can make this humble pen at a low cost. I presume that British


Airways can buy the pen more cheaply there than in the UK. That tells us about middle and low-technology investment.
The Minister for Energy and Industry, who has left the Chamber, made much of the 60-hour working week of workers at a firm that he recently visited. He was proud—not like a Japanese general, I must say to my hon. Friend the Member for Middlesbrough (Mr. Bell), but more like a colonial official of the old days—to see workers hard at it day and night, ever willing, ever ready, putting in the longest hours in Europe for the lowest wages. That allows companies to focus on extensive rather than intensive production and on securing quantitative rather than qualitative output.
I met a foundry worker in Rotherham the other day who told me that he worked seven days a week, day and night shifts, to earn just £20,000 a year.

Mr. Frank Cook: Is my hon. Friend aware that he was exceedingly fortunate to meet a foundry worker as such workers are very much a diminishing breed in this country, thanks to the Government's policies?

Mr. MacShane: I agree entirely with my hon. Friend. Four million industrial jobs have been wiped out cold-bloodedly since 1980 and we shall pay a price for that destruction of our manufacturing base.
The young man whom I met was 29 years old. He looked older than nearly all the Conservative Members present. I would have put him at about 55 or 60. He was exhausted by the long hours that the Minister is so proud to proclaim. For those long hours, he was earning some £20,000 a year. Not only on that kind of wage could he not afford a weekend at the Ritz in Paris, but he would not even be able to find the time. He said that his boss was on £63,000 a year only—far lower than the equivalent executive of a foundry in Germany, France or Italy, because low wages at the bottom drag down wages in middle management as well.
I conclude by paying tribute to the Rotherham economic partnership, which gave me the honour of addressing a group of employers recently. It is a private and public sector initiative. It involves elected representatives and it involves trade unions. I offer that as a model for new ideas and how to make inward investment work successfully in this country. As the world contest for inward investment increases, Britain must offer a new vision of economic development. That has to be based on partnership.
At the Rotherham economic partnership conference, the focus was Rotherham in the world economy. I strongly welcome that outward-looking approach. In general, however—I do not know if my hon. Friend the Member for Morley and Leeds, South (Mr. Gunnell) will refer to this—we in Yorkshire are worse off for inward investment than Scotland and Wales. The Scots and the Welsh are lucky because they have their own Cabinet Ministers and dedicated Departments who can speak, to a certain extent, outside the centralised framework which has so seriously weakened local government in England. If Rotherham is to succeed in securing a share of inward investment, in addition to its own energies it needs to be part of a regional framework which can fit into the

growing European and global pattern of regions, forming the core of the new economic clusters, which are mutually supporting and reinforcing.
We all welcome inward investment in Britain, but it cannot replace the lack of an economic policy for internal growth. Inward investment will be enhanced by three concepts: partnership, decentralisation of power from Ministers and bureaucrats, and opting into Europe. The Conservative party can offer none of those. Labour stands ready.

Mr. Sebastian Coe: I was going to preface my remarks with the hope that there were few, if any, hon. Members in the Chamber who would seriously question the proposition that inward investment brings in new jobs, new techniques, new processes and, on occasions, we hope, enlightened managerial techniques. But, having heard some of the remarks of Opposition Members, I realise that I am not on such firm ground.
I do not think that it is possible to underestimate the benefits to the UK economy of inward investment, which often, in the case of hard-pressed areas, provides a significant lifeline to rural and urban communities. The politics and economics of peripherality are inseparable from any discussion about inward investment, whether it be through overseas investment or the domestic mechanism of, for instance, regional selective assistance grants.
In 1993, overseas companies spent some £5.2 billion on 257 acquisitions and mergers. That inward flow, that success story in that year was no different from most years, in which the UK was host to more inward direct investment than any other European member state, in fact, grabbing some 40 per cent. of the European Union total of about £9 billion in net inward direct investment. Net earnings by overseas investors were some £10 billion last year and that has to be applauded, especially the significant increase on 1992 figures, which has been reflected dramatically in increased profitability of non-oil UK subsidiaries and associates. Let us not forget that more than half all net earnings from that sector were in the form of retained profits which, of course, were reinvested in the United Kingdom. There was also an added and very welcome contribution to our domestic tax yield.
The value of inward direct investment assets has more than doubled since 1987. Only last week, an international survey of business found that the UK is set to be the world's most popular destination for foreign investment over the next two years. As my hon. Friend the Minister said, that endorsement comes only a year after a business monitor survey showed that company directors across Europe believe that the United Kingdom has the best potential for manufacturing investment of all the major European Union members.
Since 1979, total foreign investment in the UK has increased nearly eightfold. It is no coincidence that, throughout that period, the solid economic gains of this Government's supply side reforms have helped to free up the marketplace. Trade union reform, for example, has been an undeniable attraction to companies which have been able to negotiate single-union deals.


I was a member of the Employment Select Committee last year when it undertook two inquiries: one into the import and export of jobs in manufacturing industry and the other into the future of trade unions. On virtually every occasion that a domestic or foreign-based company gave evidence, two overwhelming reasons for siting in this country were given. First, it was said that we were not in a headlong rush to unify welfare payments with our European partners. Secondly, it was clear that trade union reform has made it incredibly convenient for many companies to enter into the types of relationships, mentioned by the hon. Member for Rotherham (Mr. MacShane) a moment ago, which have made a significant difference to joint ventures, and there has been the convenience of single-union deals, which would have been something of a pipe dream before 1979.
It is important to remember that, in assessing the benefits of inward investment, we are talking not just about new jobs created, important as they are, but about existing jobs, which are underpinned and safeguarded. The Invest in Britain Bureau assesses that number of jobs as 70,000 for 1993–94 while the number of new jobs created nationally is said to be just under 30,000.
It is perhaps worth highlighting the fact that Scotland accounted for nearly 8,000 of those new jobs while Wales accounted for nearly 4,000. While 83 projects in the west midlands accounted for 3,000 new jobs, nearly 43,000 existing jobs were safeguarded. However, by national standards, the south-west has had more modest success. Twelve projects, which can by definition be described as inward investment, have accounted for some 1,200 jobs and can be said to have safeguarded a further 1,000 jobs.
New jobs may not be created immediately. It sometimes takes time. In the south-west in general, and in Cornwall in particular, the largest sums of inward investment do not involve foreign concerns looking to relocate or even domestic relocation. They come from the public purse. Department of Trade and Industry regional policy has operated in Cornwall since the 1950s. It has been directed towards the underlying problems of the local economy and, just as important, towards increasing the competitiveness of businesses operating in the county.
Many sectors that have traditionally formed the cornerstone of Cornwall's economy are now experiencing severe structural changes, which have made economic regeneration harder. Those changes have occurred in agriculture, fishing and tourism. The rundown of tin mining in my constituency has left Cornwall with its last working mine in South Crony. Thankfully, that mine has been saved by the writing off of nearly £24 million of Government loans with the assistance of the DTI and by a notable share issue, which was so stunningly supported by many of my constituents and the combined labours of management and the work force. In the south-east of the county, the effect of the Royal Navy cuts—sadly, the impact of the welcome peace dividend—and continuous armed service reviews have meant an average annual loss of income to the area, which is significant and will be difficult to replace.
However, the county has so many positive characteristics that are reflected throughout the region. They include the reputation of the work force for hard work and committed loyalty and an.unmatched history in industrial relations. There are excellent facilities for higher and further education, established road, rail and

air links and port facilities, which belie many common misconceptions about the distance from markets and communications shortcomings.
In chasing inward investment, whether it be of foreign origin or domestic, from the public or the private purse, it is inevitable that we enter the political arena of scarce resources. Those who make the strongest cases and the best arguments, those who sell themselves, tend to take the spoils. My constituency has benefited from the positive effects of DTI regional policy. That was certainly instrumental in the location of Contico Plastics to Redruth in my constituency, which is now its European manufacturing base. That is a good example of partnership between the public and private sectors. Jobs have been created and more will follow.
Last year, Cornwall First ran a campaign to attract the national lottery headquarters to the county. Unfortunately, it failed in its primary objective. However, by introducing the county to many potential foreign investors, it secured the contract for Stralfors, a Swedish-owned printing company in Falmouth, to provide the national lottery with continuous printing for its tickets and some of its games—jobs created and safeguarded.
The success or otherwise of public sector funding in attracting inward investment depends on the regional implications of so many other factors. In Cornwall's case, it is not helpful to have utility charges that are significantly higher than in other competing regions. I am increasingly concerned that the disadvantageous effect of price differentials in the cost of water, electricity and gas could act as a barrier to the investment decisions that are everyday occurrences in board rooms.
At present, average water charges are 53 per cent. higher in Cornwall and electricity charges 7 per cent. higher. If hon. Members will pardon the pun, there is growing pressure on the cost of gas, and that is in a county where wages are 20 per cent. lower than the national average and the cost of living is 8 per cent. higher.
It has also long been a major source of irritation in the county that, as the hon. Member for Rotherham said, other areas, particularly in Scotland and Wales, receive disproportionately higher benefits from regional policy than Cornwall. However, when considered as an individual entity, Cornwall is very close to the level of gross domestic product per head of population for objective 1 status under the European Union structural funds.
There are calculated to be 25 to 30 agencies and organisations in Cornwall engaged in some form of economic development activity. In the two counties of Devon and Cornwall, that figure rises to nearly 70. I do not wish to detract from their efforts, but I must question the duplication of effort, time and precious resources that are being managed and distributed by so many structures, all tilling the same soil.
In large part, for the business community in my constituency, those agencies and organisations remain a confusion of acronyms. When I addressed a group of small business men in Falmouth the other day, I discovered that the local banks, which still account for so much start-up capital, had little or no idea what those organisations and agencies do. It is also not uncommon to find the same faces turning up on one or more of those organisations.


I hope that the business link scheme, a one-stop point of contact for information and support for local businesses, will fill the gap and ease some of the confusion. I visited one such scheme in my constituency last week, which is making an exceptionally good start.
Regional selective assistance, which takes the form of discretionary grants to support projects in areas of assisted area status, has been very helpful in the location of business in Cornwall. It is right, however, that such grants are not available simply to relocate jobs from one part of the country to another.
Yesterday, I was perturbed to have a conversation with a would-be investor in the county, who simply could not remain in business where he currently is. A new sail-making process under licence from the United States of America, which requires the labour skills, size of plant and availability of labour where he currently is, is not available. I shall not belabour the House with the minutiae of detail of the case. Suffice it to say that, halfway through negotiations with the Department of Trade and Industry in Bristol, he finds himself the subject of an approach from a Welsh council to relocate there, supported by the Welsh Office and underpinned by the local training and enterprise council, two jobcentres and the local councils. He is now in a Dutch auction, with offer and counter-offer being made with public money. I am sure that my hon. Friend the Minister has clear views about the acceptability of that case, and I should welcome them.
Full-time, meaningful and sustainable jobs are created by the strategic decisions of the business community. When they are the result of overseas investment, it is because our economy offers a more attractive location. That is not a happy accident. It is the synthesis of sound economic policy underpinned by selectively targeted regional policy. It is the economic prerequisite of deregulation, competitiveness, a flexible labour market and continued downward pressure on labour costs.
Here lies a message for future European success: we must guard strenuously against uniform welfare costs in the European Union. If ignored, they will help countries in the Pacific rim to cream off the global flows of inward investment to which we have successfully become the natural home.

Mr. Nick Harvey: Like other hon. Members, I enjoyed listening to the Minister give an entertaining Friday morning description of the inward investment that has been achieved and, with justification, claiming some of the credit for it. I welcome the inward investment that has been achieved—the record has been good—and I hope that there will be more in future. I agree that, by attempting to promote successful businesses in the regions where they are needed, regional selective assistance is, in principle, the right way to go about such matters.
However, the Minister was churlish in trying to provoke the hon. Member for Middlesbrough (Mr. Bell) and others into suggesting that they, would not welcome the success that there has been in their parts of the world. All hon. Members welcome Samsung's decision to come

to the north-east of England. I, too, from the south-west, hope to speak to the Minister shortly about a prospect in my constituency.
The remarks of the hon. Member for Falmouth and Camborne (Mr. Coe) are only too true. The problem of the south-west, as a peripheral region of England, in trying to compete with Scotland and Wales, is that the public authorities representing Scotland and Wales have more political power and more money than those representing the south-west. However, I pay tribute to the work of officials in the Department's regional office in the south-west and to those to whom the Minister referred who are promoting our cause abroad.
It was good that we heard from the hon. Member for Enfield, North (Mr. Eggar) and not from the right hon. Member for Enfield, Southgate (Mr. Portillo). In view of the exchanges that took place, I shall choose my words with care. Let them be simply that the right hon. Gentleman appears to have questioned the value of regional selective assistance. I do not. I think that it has been useful. It is welcome to see the Government pursuing that approach and not that which was promoted by a former Secretary of State for Trade and Industry, Lord Tebbit, who took the view that people should get on their bike and go where the work is. I am glad that the Government believe in intervention and strategic planning, at least to the extent that they see advantage in jobs going where the workers are.
Foreign investment in Britain contrasts rather strongly with British investment in Britain. A reminder that playing host to foreign successes is a poor second to enjoying one's own success is probably best expressed by the President of the Board of Trade, when, in 1987, he wrote in his book:
An ominous development has been an increase in foreign ownership and control … When the going gets rough, as it always will in such a cyclical industrial sector, foreign subsidiaries in Britain will bear the brunt of the cutbacks. The skills in Research and Development will be lost.
Those were not the remarks of a conspiracy theorist representing what the Minister chose to refer to as the Neanderthal wing of the Labour party; they are the remarks of the President of the Board of Trade. He could have pointed out that some companies' commitment to Britain can be even less. In many cases, research and development is consigned to the home country or to other centres. That is not surprising when one considers some of the evident infrastructure weaknesses in Britain's manufacturing industry. Nor is it uncommon to see multinationals using British labour as an assembly force of often part-time and peripheral workers while the more secure and skilled work is carried out elsewhere. The President of the Board of Trade himself proved that basic points have not passed him by when, in reference to the sanctity of Rover cars, he said:
For major parts of the British motor industry to fall entirely into foreign hands would leave it a hostage to decisions in Detroit, Pans, Turin and perhaps Tokyo.
That is exactly where much of the profits are accruing.

Mr. Peter Ainsworth: I wonder whether the hon. Gentleman has read the Trade and Industry Select Committee's report, which was published this year. It considered the potential disadvantages of British inward investment, to which the hon. Gentleman alluded. If he has read that report, he will know that there were few examples of the type of disadvantage that he mentions.


The report concluded that they were not typical of inward investment generally and that the advantages of inward investment heavily outweigh the disadvantages. I hope that the hon. Gentleman will bear that point in mind.

Mr. Harvey: There can be no doubt that the advantages of inward investment outweigh the disadvantages. I did not seek for one moment to suggest the contrary. That was the purpose of my welcoming inward investment. None the less, the fact remains that there are some inherent weaknesses in inward investment, which would not be inherent in British investment. All hon. Members want more British investment, particularly as we come, we hope, out of a long recession.
One reason why inward investment has come here has been the transformation in labour markets which has been caused by mass unemployment. It is strange that the Government are so proud that British labour markets have changed by dint of the fact that so many are out of work and that some of those who are in work are on such low wages. That Britain is becoming a low-wage economy is beyond doubt.
It has been a common boast of Conservative Members in recent times that their success in delivering low labour costs has been one of the things that has attracted foreign investment. Indeed, the Minister said as much. That is a curious stance for them to take when one remembers that in 1979, as the Conservatives were determined to sweep out an era that they considered to be unsuccessful, they said in their manifesto that the party wanted
a high productivity, high wage, low tax economy".
What a pity it is that we have waited 15 years only for the Tories to deliver the opposite of all three. We have lower productivity than many of our competitors, a part-time, casual and low-paid labour market, and we have just experienced the biggest tax hike since world war two. It is reassuring to know that the consequences of those policies have not always escaped the Tories. Their 1979 manifesto went on to state:
At the moment we have the reverse—an economy in which the Government has to hold wages down in order to try to make us competitive with other countries where higher real wages are paid for by higher output.
That is poignant when one considers the backdrop of continuing decline, and when every country in the EC except Denmark and Greece has managed to increase output at a greater rate than we have over the past 15 years. The trade deficit of the early 1980s has been a recurring problem.
The hon. Member for Rotherham (Mr. MacShane) made the point that many countries in south-east Asia—many of the newly industrialised countries—which have been successful in attracting investment have done so on the basis of high levels of skill and, in many cases, relatively high pay. Low wages on their own would be one thing, but the country currently bears testament to the fact that low pay buys low skill.
On the sell-off of Rover, the Government announced with not inconsiderable pride that the British work force are paid 25 per cent. less than their German counterparts. Surely, the fact that the German counterparts have vocational qualifications that are three times higher than those in Britain is not unrelated. In a world that becomes more competitive by the day, it is nothing short of a tragedy that we are becoming less able to compete with our high-tech, high-skill and highly productive economic

rivals. If the hon. Member for Rotherham was perhaps exaggerating slightly when he compared our position with that in Romania, one nevertheless understood the point that he was making.
Tory Members referred to the social chapter and the impact that it might have on our ability to attract inward investment. They cannot have their cake and eat it. They tried to claim that the great success of the Government's policy on a broad front is what has attracted investors to the United Kingdom and then in the next breath claimed that it was almost only the fact that we have opted out of the social chapter that attracted investors, and that in the event that the policy was reversed, everything else would be undone.
Hon. Members have talked about German investment. We know that German companies, when they make investment decisions, are much better than many of our companies at looking at the long term. No one doubts that, in the foreseeable future, the British opt-out from the social chapter will come to an end. It was only a short-term political device to get the Government off the hook at the time. If one looks ahead two or three years and considers some of the directives that have resulted from the social chapter—I readily acknowledge that they have been too detailed and too prescriptive in their terms—one reflects that Britain has yet again put itself at a disadvantage by not being able to argue those points when they were being considered.

Mr. Charles Wardle: I understand what he hon. Gentleman is saying about the merits of German long-term planning. Why does he suppose that some 1,500 German companies have invested in the United Kingdom?

Mr. Harvey: I welcome inward investment, and I welcome very much German inward investment. My specific point is that the Germans must be reckoning that we shall end up inside the social chapter. If anyone reckons that the Germans have come to the United Kingdom simply and specifically because we are not inside it, they fail to see the quality of German decision making.
We need investment to be made a matter of national urgency. The whole problem of post-war British industry has been a continued pattern of underinvestment. As many hon. Members know, history has proven time and again that British people have great potential for innovation and enterprise. It is a pity that we have seen recently that our home-grown investment has not been the success story that the Government have painted.
As a nation, we need to invest in education and science and technology, and we need to see more commitment to research and development on the part of British industry and the Government. At present, the United Kingdom is 19th out of 22 OECD countries in terms of spending on industrial research and development. Investment is also needed in the national infrastructure—that point was made earlier. We have seen the lowest investment growth of any G7 country over the past 15 years, and the Government have presided over an historic reduction in investment as a proportion of gross domestic product.
Our manufacturing base has declined—it would be an exaggeration to say that it had declined almost to the point of extinction, but it certainly is not the powerhouse that it was previously. Our ability to meet demand with supply is even weaker. Only last month, the Government raised


interest rates because they were afraid of overheating. They thought that the additional demand in the economy could not be met by our capacity to supply. That says something about the present state of our industry.
Tackling financial short-termism and the cost of capital—the figure for the United Kingdom is far in excess of that of many of our competitor countries—is a priority that the Government should be setting. Without the Government needing to resort to dismissing all the help that is given to industry as socialist planning, there is a role for them to provide the structures and support that industry needs. The Government now stand almost alone in the developing world in suggesting that there is not.
Perhaps a symptom of the Government's attitude has been the remarks made by the President of the Board of Trade, who said:
The most constructive thing the Government could do for business would be to close down the Department of Trade and Industry.
Of course, he said that during the time that he was out of government. If that is representative of the views of the President, it is hardly surprising that we end up discussing other people's successes, rather than our own.

Sir Michael Grylls: I listened with great interest to the speech of the hon. Member for North Devon (Mr. Harvey). As he spoke, my mind occasionally wandered, and I thought about my experiences in the wonderful part of the country that he represents. It is one of the most beautiful parts of England.
I am afraid that the hon. Gentleman may have been in north Devon too long, because he is out of touch with what is happening in industry. Certainly, his speech did not have much to do with inward investment. If he examined the pharmaceutical industry, he would find that firms such as ICI and Zeneca were leaders; five of the top 12 drugs in the world come from Great Britain. Our motor manufacturing companies are increasing their output every year, and their exports to Europe have increased. Our machine tool companies, having gone down in earlier years through a lot of folly—there is no time to debate that matter today—are now beginning to rise again.
I do not know where the hon. Gentleman has been. Perhaps he has spent too much time on the beaches in north Devon—I do not blame him for that. He should raise his horizon a little and see what is happening in the country at large.
I hope that the hon. Member for Rotherham (Mr. MacShane) does not meet too many foreigners, because if he does, we will not get any more inward investment. Talk about a prophet of gloom. He must have spent hours every night dragging out every dismal, boring, negative figure. I might send him on a positive-thinking course, which would make him a little more cheerful. He was Mr. Gloom—pushing everything down and ignoring everything positive.
It is generally accepted that the United Kingdom—we should be thrilled about this—is in a uniquely strong position. That is perhaps strange, given our history. We are getting some of the advantages of developing industrial economies such as Korea and Taiwan. We are

getting the sort of characteristics which they have been enjoying. They have fast-growing productivity; we have fast-growing productivity in the United Kingdom.
I did not hear the hon. Member for Rotherham mention that; perhaps I was not listening at that moment. One of the characteristics of fast-growing economies is that they are based on technological catch-up—they are leapfrogging technologies and putting new technologies in place. As has already been said, they have the advantage of relatively low labour costs.
Britain is in a similar position, certainly with regard to the European Community. In terms of hourly labour costs—these figures were produced by the United States Bureau of Statistics—West Germany has a figure of 152, while the United Kingdom's figure is 76. The figures for other countries are 127 for Belgium, 97 for France, and 95 for Italy—compared with 76 for the United Kingdom. That includes social costs. Let us compare the social costs in Germany with those in Britain. The social costs in Germany almost double the money that the firms have to produce to pay to the men. We are in a uniquely favourable position, and we cannot buck it.
I agree with the hon. Member for North Devon in one respect. Inward investment is not only about the opt-out from the social chapter. It is about all sorts of factors, which have rightly been referred to during this morning. Nevertheless, unnecessary social costs imposed on companies are a real factor. I can give examples of British companies which operate in the German market. They bring British workers into Germany to do the job because it is more economical. I do not suppose that the Germans much like it, but I expect that the British are rather pleased to have jobs in Germany.

Mr. Frank Cook: Does the hon. Gentleman accept that, in addition to the social factors to which he refers, one of the principal elements of added costs in the past 15 years in Britain as compared with Japan and Germany has been the excessive cost of money?

Sir Michael Grylls: That has been true of the British economy for too many years. All Governments—if we can be ecumenical for a brief moment—in the past 20, 30 or 40 years have failed Britain by not keeping inflation properly under control.
The hon. Gentleman cannot point that finger at this Government. We have record low inflation. The hon. Gentleman is perfectly right—[Interruption.] I gave way to the hon. Member for Stockton, North (Mr. Cook) and he might do me the courtesy of listening. It will take time for business to realise and believe not only that we are in a low inflation period but that we will remain so.
If we are honest, we will admit that we in politics are on trust—on trial is perhaps a better phrase. People out there do not necessarily believe that inflation will remain low for a long time. We have to prove it. The advantages will come when we have had—let us hope and pray–20 years of old-fashioned low rates of inflation. Then there will be a huge benefit to industrial investment. So perhaps Conservative and Opposition Members are not too far apart on that. It is true that there is a lack of faith among many investors about how long low inflation will remain, but I am confident that, while the Conservative Government remain in power, it will remain low.


The United Kingdom has become like a developing industrial economy such as Korea or Thailand, because, before the 1980s, we were shackled by outdated trade union laws. We reformed those laws. It sounds old-fashioned now to talk about the activities of the National Graphical Association, but it almost destroyed the newspaper industry and the printing industry.

Mr. Cook: That might have been no bad thing.

Sir Michael Grylls: Perhaps it might not. Some Conservative Members might say so. I am not sure whether Opposition Members would say so, but I must not stray into that subject. The reform of trade union law has enabled us to be a flexible economy.
To be successful nowadays, whether we like it or not, we have to have flexible hiring. The hon. Member for Rotherham, Mr. Gloom himself, does not like it, but he is living in a different, past world. He has gone back to Geneva to check his Swiss bank account, with hi; Swiss pen no doubt. I did not really mean that.
That is like a red rag to a bull to the old Labour party—perhaps it is to the present Labour party. It is rather a test of whether the Labour party has changed or not. If it truly wants the number of people employed in Great Britain to rise, it has to accept that that will happen only if we can provide a climate of flexible employment legislation. It is vital that we maintain that.
It is true—even Mr. Delors has said so—that Britain is a paradise for foreign investment. My hon. Friends do not expect me to quote Mr. Delors, even on a Friday, but in that respect, he is bang on. We are getting foreign investment from Japan and many other countries. Those companies bring into Britain the most modern machinery and manufacturing and management techniques. There is cross-fertilisation between them and our British home-based firms.
We are perhaps not terribly good as a country at changing. Industry over many years has not been good at changing, perhaps because we were first into the industrial revolution—I do not know. I believe that some of the ideas, machinery and techniques, such as the just-In-time technology, have come from foreign firms which have set up in Britain and have been a tremendous advantage.
I was in Japan just when Nissan was contemplating an investment in our country. I asked one of the Nissan people what they thought about British component manufacturers. I received an honest reply. He said that one or two of the bigger companies were world class. They exported all over the world and did very well. But he added that the great mass of them, in Nissan's judgment—it had done a study by that period—were not nearly so efficient as they should be. He said, "I think that we will help them." I did not have the impression that it was said in an arrogant way. It was said in a sensible, practical way. He predicted that Nissan, which required demanding standards and prices from its component manufacturers, would have a good effect on our home-based component industry. I believe that that is exactly what has happened.
The advantage is that the component manufacturers which have pulled their socks up, are much more efficient and are doing much better can now export to the continent and supply continental motor firms. Prhaps they would never have been able to do that if they had not been driven

into it when the huge Nissan company set up in Sunderland, produced lots of motor cars and said, "Supply us if you are good enough."

Mr. Peter Ainsworth: Does my hon. Friend agree that we are fortunate that Nissan decided to come here when it did, given that, at the time when it was contemplating the investment, the Trades Union Congress described the potential investment as alien?

Sir Michael Grylls: It shows how out of date the TUC was. I hope that it never utters such words again.
I am sure that inward investment has brought a clear benefit for jobs, broadened our industrial base, brought huge benefits by bringing new technology to manufacturing, management and production, and helped some of our smaller firms which were perhaps a little stuck in the mud. We are stuck in the mud in this place, too, but that is neither here nor there. We are not talking down to anyone. It is perhaps a British characteristic. The influx of ideas and new management techniques is one of the most important things that inward investment has brought to Britain.
I say to my hon. Friend the Minister, "Keep up the good work. Use your influence or perhaps all our influence to maintain the right business climate here—a sensible, flexible business climate with low corporate taxation. Then the investment will continue to come into Britain and all the people who live and work in Britain will benefit hugely."

Mr. John Gunnell: I was highly amused to hear the Minister for Energy and Industry describe me as part of the Neanderthal section of the Labour party on inward investment, especially as I was chairman of the Yorkshire and Humberside Development Association for 12 years, from 1981 to 1993. It was one of the regional development organisations that the Government supported as a mechanism for regional involvement in attracting inward investment.
In that role, I met the Minister of State's predecessors from the early 1980s until the right hon. Member for Hove (Mr. Sainsbury), who recently parted with that responsibility. As I co-operated with all those people, I was entertained to hear that I suddenly became a Neanderthal as soon as I entered the House and sat on the Opposition Benches.
That subject was one of the interesting aspects of the Minister's speech. Outside this Chamber, inward investment means partnership and co-operation. I do not know anyone who does not want to attract industry to the United Kingdom. In the House, that partnership suddenly disappears because so many people are committed to being combative that they cannot see the important issues at stake.
If one works for a regional development organisation for 12 years, one obviously experiences some periods of drought when there is no inward investment, and other periods of success when investments go well. One also experiences changes in Government policy. Sometimes the Government want organisations to do such and such, at other times they do not—that goes with ministerial responsibility.


Some Governments value the work of regional development organisations and accept that one must have partnership between the centre and the regions if one wants to attract investment effectively. Others think that everything should be done from the centre.
For the most part, the job was entirely voluntary—until the last year— and I would not have done it for so long if it had not given me considerable satisfaction. Obviously, part of that satisfaction was gained from achieving a specific success and from inward investment coming to one's area.
The companies whose representatives I met before they decided that they would invest, invested and now operate on Humberside, included Citizen, Pioneer and Kimberley-Clark. Those companies are household names and each of their Yorkshire facilities was won against strong competition from the continent. They are household names partly because of their products, and that is especially true of those companies that make various forms of electrical equipment.
Apart from the household names, I met a host of other companies, many from the Federal Republic of Germany, Japan and the United States. Just before I stopped doing the job, I was involved with Exsa—the first Turkish inward-investing company—which recently set up a factory in Leeds.
Those companies came to the United Kingdom partly as a result of work done by the Yorkshire and Humberside Development Association—work that was done in conjunction with the Department of Trade and Industry, and especially with the Invest in Britain Bureau.
Having done that job for a considerable time, I must make some observations on the factors that are important in achieving inward investment and on some of my worries as a Member of Parliament about the risks that the Government are taking with the future of that investment.
Despite the comments that the hon. Member for Surrey, North-West (Sir M. Grylls) made about my colleague the hon. Member for Rotherham (Mr. MacShane), I agree with the hon. Gentleman's arguments that achieving inward investment involves partnership. It will not work otherwise. The Government alone cannot bring in a company; nor can the regions do so without the Government. One therefore needs co-operation. There has to be a partnership between Government and the agencies that want to attract investment to a region. That partnership has to cross the political divide.
For electoral reasons, local authorities are largely under Labour control. I know of no such authority that would want to turn away inward investment. Achieving a working relationship is all-important. Throughout my time as chairman of the YHDA, there were political differences among the councils in the region. North Yorkshire county council has been solidly Conservative. For at least six of the years that I was chairman, my vice-chairman was a Conservative member of that county council.
I operated with Gerald Turton as my vice-chairman for a considerable time. He was the son of a distinguished former Member of this House. We worked together to ensure that investment came to the region and had no difficulties in doing so. One is trying to get inward investment and to get the proportion of that investment

that comes to one's own region as high as possible. It is a great mistake to make inward investment a combative issue, as the Minister attempted to do this morning.
People do work together. One of the most difficult aspects of my last years in that job was that I had to get nine district councils and two counties to work together on inward investment. It was a constant headache ensuring that everyone was on board. Political difference was not the most divisive factor—it was that one wanted everyone to contribute to the organisation. Financially, they contributed per head of population, but the chances of winning an inward investment project were not equal because, if selective regional assistance applied to one area, it had a greater chance of success.
During the past five years, I was involved in 17 projects that involved a serious number of jobs and in which regional selective assistance was involved. Of the 17, eight were on Humberside and the others were spread around six other councils. A group of councils therefore did not win projects, because they were among those that did not get regional selective assistance, and because the arguments for such assistance going to them were not necessarily thought so strong.
One has to keep all those people on board. It is important for a regional development organisation to market the region as a whole, so one has to build partnerships which are not merely effective for the council areas that gain investment but which ensure that everyone gains something.
Private sector involvement in regional development organisations is enormously important. We developed strong private sector links, which paid off financially. At one time, the larger proportion of our income came from the private sector. We concentrated on that. One Minister of State—I think that it was the hon. Member for South Ribble (Mr. Atkins)—set targets for the amount of private sector investment, which was probably quite a good thing. Most people think that he set the targets too high, and they were subsequently reduced.
It is important that the private sector is involved, but not just for its money. When one meets companies from Japan and the United States—one has met plenty of them—it is very important for the public sector to meet them together with the private sector, so that the companies can see that the welcome which one brings spreads across both public and private sectors.
The hon. Member for Falmouth and Camborne (Mr. Coe) made a good point about the cost of utilities in our country in comparison with some of our competitors. Utilities have a big role to play, because some of the investments which come in—particularly major investments—are major users of water or power, and establishing a relationship with the utilities is very important.
In Yorkshire, following the privatisation of the major utilities—whatever one thought about the legislation—we thought that it was important to work with them and to get them on board in assisting us in attracting inward investment. I must say that Yorkshire Electricity, Yorkshire Water and others have worked very well with us in recognising the priority of getting companies in. That is a part of the partnership which has not been mentioned this morning.


I agree with the hon. Member for Surrey, North-West (Sir M. Grylls) that we now have many more suppliers who can meet the standards required by investors, and not just standards of quality. The "just in time" philosophy which we have picked up from Japan is now being applied much more widely in our industry than was the case 10 years ago. Obviously such a practice is good, not only for overseas companies which come here and want their supplies on time, but for our indigenous industry.
Whatever one says about the role of the private sector and of local authorities, the role of the Government is critical. In doing that job for a period, the co-operation of the Invest in Britain Bureau has been very good indeed. I believe that we should pay tribute to it in this debate; it works well with the regional development organisations.
Obviously, each regional development organisation probably feels that it could do with more funding, and I shall come to a comparison between Scotland and the English regions in a few moments. But it is important that that organisation, which is part of the Department of Trade and Industry, is properly funded, and that one looks at strengthening the role of the regions in promoting inward investment.
A ministerial lead is important, and I have seen very different attitudes struck by some Ministers. The first Minister who invited me to London to talk about what Yorkshire and Humberside were doing was the right hon. Member for Kingston upon Thames (Mr. Lamont).
It is surprising that the right hon. Gentleman takes the view of the European Union that he does now, because we all knew in the mid to late 1980s that the reason why companies from overseas were interested in coming to this country was that they wanted to get into the single market. There was no doubt about that, and when one met Japanese and American companies, they told one so. Companies from the federal republic also gave clear reasons why they wanted to be located here, as well as at home.
I came to meet the right hon. Member for Kingston upon Thames when Yorkshire and Humberside first got into working in Japan, and he wanted to urge me to see that as little as possible of the association's budget was spent in japan. He took the view—it was obviously the view at the DTI at that time—that there was not much to be gained from working in Japan, and that we were not likely to get major investments coming in through a regional development organisation. At that time, we took his point on board, and we did not expand our service in Japan for quite a while.
Subsequently, the policy changed and we changed. I must say that, had we not changed, companies such as Citizen, Pioneer and Koyo Seiko would not now be located here. As I have said, each of these firms won against competition from continental Europe.
There also has to be a case for ministerial decisions which are different from the advice given by the Department. I can recall an investment from a company called Devalit—a West German family business—which came here and created some 300 jobs in the Scunthorpe area. Officials in the Department had turned the company down for regional selective assistance, and I thought—as chairman of the association—that was a mistake. The company was bringing technology to the country which

was not available, even though some of products which it produced were being manufactured in the United Kingdom.
The Minister involved at that time was the right hon. and learned Member for Rushcliffe (Mr. Clarke) and, although I was told that writing to him would be a waste of time, it proved not to be at all. The right hon. and learned Gentleman decided that the company should get regional selective assistance, and those 300 jobs are still there in Scunthorpe.
One must take the view that the partnership necessary to make inward investment effective is one that stretches all the way from Labour local authorities, to regional development organisations which may have some dominance from Labour members, to the Department and to ministerial level. The partnership must take place across the political divide if one wishes to get the maximum from inward investment.
I shall come back to funding. The funding of investment in the English regions, or the arrangements which we make for investment, is obviously different from the levels of funding for Scotland, Wales and Northern Ireland. That owes something to the fact that there is direct ministerial responsibility in those areas.
While we welcome the changes in Northern Ireland, we must recognise that it means that Northern Ireland will provide stiffer competition for inward investment coming into the United Kingdom than it did before. Given the employment situation in Northern Ireland, we must welcome that, but we must remember that it also provides competition for other English regions. One must look at the amount of funding which the IBB is able to receive, because the good job that it is doing must continue.
I hope that the Government will remember that no actual inward investment is possible without the co-operation of local authorities. In our region, Humberside county council has been involved in at least half the significant investments. The hon. Member for Brigg and Cleethorpes (Mr. Brown) frequently refers to the Kimberley-Clark investment, and the site which Kimberley-Clark chose for its company was developed by Humberside county council.
I am quite sure that the people who processed the recent changes in local government will find that business men in Humberside are not enthusiastic about the abolition of the county, because it has brought together the economic needs of both sides of the Humber.
The Humber estuary area has a high potential for inward investment. It is one of the few areas where considerable land is available that would be suitable for chemical companies, which generally have difficulty gaining planning permission. Splitting the Humber area in terms of local responsibility for its economic development is a big mistake—a view shared by many in the area. That is not to say that Hull city council has not been extremely supportive of inward investment, but the area deserved unitary consideration.
The Government's officers overseas are extremely helpful. The Foreign Office's arrangements in Japan are different from its arrangements in the United States, which is wise. I found the British officers in the consulates in the United States very helpful and constructive. That was especially so with a number of the secondees whom the Department of Trade and Industry is funding to operate in consular offices around that country.


The position is different in Japan. In the United States, a great deal of investment does not come through the embassy, whereas in Japan the embassy is the natural first port of call for potential investors. The embassy in Tokyo and the consulate in Osaka were especially helpful on inward investment. They do not suffer from the illusion, which seems prevalent in this country, that the Conservative party is in favour of inward investment and the Labour party is not.
Indeed, on two or thee occasions the embassy asked me to allay the fears of Japanese investors that an incoming Labour Government would end Japanese investment, and that those companies that had already invested in the United Kingdom would find life very difficult. The officials are not so naive as some of the statements made in this House suggest.
I want to explain why I believe that a future Labour Government would be positive about inward investment. The social chapter is not the offputting factor suggested by Conservative Members. Pioneer is typical of Japanese companies, because it said before it came that it was anxious to have a single-union agreement. The trade union movement have now come to accept that, and various trade unions compete for such agreements. The only unions that still make a great fuss about that are those that have never won any.
In the case of Pioneer, what was then the EEPTU—the Electrical, Electronic, Plumbing and Telecommunications Union—and is now part of the Amalgamated Engineering Union, won the agreement. Its officials have told me, both at the time and since, that the conditions for workers in that company are superior to those in almost any other company in the region. Indeed, they said that, if they could get the same conditions of service across the region, they would be delighted.
The social chapter will not cause such major companies much of a problem. People talk about the minimum wage, but most of the companies that I have helped to bring to this country would be insulted by any suggestion that they would want to pay any less than the suggested minimum wage. The bogeys invented by some have no real basis.
Indeed, it is a dangerous policy for the Government continually to say that a change of Government would mean the end of inward investment and cause a great deal of discomfort for those companies that have come to this country. That message is picked up abroad. It was reported to me on the recent YHDA visit to the United States. Previously, the social chapter was not mentioned on my visits, because it was not part of the vocabulary of the time, but now it is mentioned.
In conjunction with opinion polls, companies are citing the Conservative Government's fears as one reason to think twice about investment. The Government's false propaganda on that issue is a disservice to inward investment. Certain members of the Government are far more interested in peddling a party political line in order to build up their support for the next general election than in giving people a realistic idea of what is permanent in our way of working and what will ensure that any company that comes here will thrive.
It is therefore a dangerous policy. It is not funny to attack the Opposition by saying that we are not interested in inward investment. It is not only wrong but dangerous, and counter-productive for the prospects of inward investment.
I did not disagree with much of what the right hon. Member for Tonbridge and Mailing (Sir J. Stanley) said. However, a major factor in Japanese investment is language. But the Japanese are also concerned with skills and communication. The policies put forward by the Labour party show that we are paying far more attention to skills training, and a great deal must be said about communications. Future inward investors should not be made afraid that a change of Government will jeopardise their investment. On the contrary, I am confident that it will be good for it.
I am concerned about the fact that Yorkshire and Humberside is currently receiving less inward investment. Some £490 million were invested in 1991, but in 1992–93 the figure went down to £130 million. I do not have the figure for 1993–94. The Library paper shows that, in 1991, 11,500 jobs were created or safeguarded and, in 1992–93, the figure was 6,500. The figure shown in the research paper is just short of 6,000 for 1993–94. That seems to indicate a drop, and I am concerned that, despite Kimberly-Clark, the proportion of inward investment is not quite standing up.
Two practical matters should be dealt with in terms of how the Invest in Britain Bureau operates. It would sometimes be helpful if people from the IBB spent a little time working in the regions on a secondment basis. Those of us who represent Yorkshire and Humberside feel that we may not have had a good deal over Samsung. Naturally, we are delighted that Samsung has come to this country, but we know that it seriously considered coming to Doncaster. However, our efforts to attract Samsung were largely dissipated because of political priorities for where the company should be located.
It is important that the Government be even-handed when dealing with the regions, although I congratulate the north-east on its acquisition. I realise that the DTI has priorities. I congratulate, among others, Mr. John Bridge of the Northern Development Company, who happens to have left Yorkshire and Humberside to join the NDC for a higher salary.
When I approached the Department of Trade and Industry at the request of my association —all the members wanted to match the salary so that Mr. Bridge stayed—I was told that we were not allowed to match the salary paid by the Northern Development Company. I do not object to that, because Mr. Bridge has done an excellent job there, but I believe that there should be even-handedness for the regions.
The IBB carries out some central research for regional development organisations. It might be helpful if some of that research was done in the regional development organisations rather than at the centre.
We should at all times bear in mind the importance of the European Union, and I agree with what the Minister said in his introduction. Our membership of the European Union is essential to much decision-making, and it is notable that, over the past five years, almost £1 billion has been invested in Yorkshire and Humberside. Some 18 per cent. of that is American money, 13 per cent. is from


the far east and 50 per cent. is European money. That emphasises the importance of Europe in the whole process.
We should therefore try to avoid the expressions of national virility that we often hear from Conservative Members, and which are associated with maintaining our separateness from Europe. Economically, our strength is our association with other members of the European Union.
A Labour Government would be extremely positive for the whole process of inward investment, because we would incorporate the English regional development organisations into the regional development agencies, which would also cover aspects such as regional investment and organisations such as venture capital organisations which operate on a profit basis.
A united organisation, which would include an element of devolution such as there is with the function of English Estates, would be able not only to market the area as an area for investment, but to take more positive steps to bring about investment and to ensure that sites and premises were available for those looking for them.
The positive moves that we shall take in creating regional development organisations for England and Wales will not detract from the investment going to Scotland and Wales, but will ensure that the English regions compete on an equal basis for inward investment.

Mr. James Clappison: I welcome the opportunity to make a brief contribution to this debate, which is timely in view of the recent excellent news about inward investment. We heard some excellent news from the north-east. We heard a great deal about the north-east today and we heard a great deal about Yorkshire in the speech by the hon. Member for Morley and Leeds, South (Mr. Gunnell). I should like to shift some of the attention away from those regions and to focus on the south-east in general and on Hertfordshire in particular.
Before turning to that subject, I take issue with some of what was said by the hon. Member for Middlesbrough (Mr. Bell), the Opposition Front-Bench spokesman. I do not doubt the depth of his concern for the north-east and for Cleveland, and I am sure that he shares our delight in the excellent news about Samsung coming to his constituency and in the excellence of inward investment in the north-east. I take issue with him, however, on the economic rationale and policies that underlie his sentiments. The hon. Gentleman told the House that the reason for our success in attracting inward investment was the strength of our manufacturing tradition and the potential and excellent skills of our work force. I take issue with the hon. Gentleman about that. If we are to live up to our great manufacturing tradition and to realise the tremendous potential of our labour force in this country, we must have the right economic policies to create the right economic conditions for inward investment. The hon. Gentleman looked back to the 1970s as a sort of golden age of inward investment which compared favourably with the 1980s and 1990s, when those conditions were in place and the right policies were being pursued.
We have heard a number of statistics in today's debate and I hope that I am not being unkind to the hon. Member for Rotherham (Mr. MacShane) if I say that he did not

skimp on statistics—certainly not on the selectivity of those statistics. I wish to draw the attention of the House to some other statistics, which are broadly based and representative, and which answer the point made by the hon. Member for Middlesbrough. They involve inward investment in the 1970s, 1980s and 1990s, and I confess that I am relying on a piece of work prepared by the Library. If the hon. Gentleman has any better evidence, I suggest that he produces it.
The Library has produced a document for me comparing inward investment in the 1970s, 1980s and 1990s at constant 1993 prices. It shows that throughout the 1970s inward investment had an annual average of just over £6 billion. In the 1980s that figure rose to almost £9 billion, and in the 1990s so far we have had annual inward investment of almost £12 billion—almost double this country's performance in attracting inward investment in the 1970s. The reasons for that are clear to see.
My right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) made an eloquent speech about the conditions experienced in this country in the 1970s. There was a worry at that time that the country was failing to attract inward investment. Surveys were carried out which found that United States inward investment was declining and we were not living up to our potential. One of the reports of that period talked to prospective inward investors and found that they had
concern over inflation, the perceived lack of long-range Government policy on taxes and nationalisation, industrial unrest, the restrictive practices of trade unions, a social system which produced a disincentive to work and the better growth prospects of most other European countries.
It was found that all those factors in the 1970s militated against inward investment into this country. Overseas investors came to this country and saw exactly what we were experiencing in this country at the time—over-regulation, over-taxation, bad union practices, a disastrous educational system and an economy that was chronically inflationary.
The longer I listened to the hon. Member for Middlesbrough, the more worried I became about the Labour party's proposed march towards a free market economy. The longer the hon. Gentleman talked, the more doubtful that proposition became—nowhere more so than when he talked about the difference in the relationship between outward and inward investment. I could not believe what the hon. Gentleman was saying about outward investment. If what he was saying was right—that an imbalance between inward and outward investment was the mark of economic failure—countries such as Japan and Germany, with a huge tilt between outward and inward investment, would be economic basket cases. I do not know where one would look in the world to find an example of a country where inward and outward investment were in perfect equilibrium. Perhaps one could look to somewhere like Albania, where there is nothing much going in or out except the people. The hon. Gentleman was holding up somewhere like Albania as a model of economic success.
By the time the hon. Gentleman reached the end of his speech, I doubted whether the march towards a market economy had begun. The hon. Gentleman rightly started his speech talking about the successes of inward investment in this country. At the end of his speech, he was talking about companies which had failed in this


country and failures in inward investment. The hon. Gentleman and the Labour party must realise that that is part and parcel of a free market global economy in which some businesses succeed and some fail. Thankfully, more businesses have been succeeding than failing in this country which is why more and more inward investment is coming here. It would help to attract the inward investment about which the hon. Member for Leeds, South is so anxious if, instead of talking about failures, Labour Members talked about our successes in promoting inward investment to the rest of the world. Conservative Members unequivocally believe that inward investment is a good thing. It creates tens of thousands of jobs and makes a major contribution to our balance of payments. I suspect that one reason why UK exporters and exports are doing so well is the major contribution from inward investment in high-technology export manufacturing industries. Inward investment also spreads good management and business practices.
I ask my hon. Friend the Minister to bear in mind the particular case for inward investment in the south-east and in Hertfordshire. We were delighted to hear earlier of the tens of thousands of jobs created in the UK by inward investment, many of them in the north-east. Of the new jobs created last year, fewer than 1,000 were created in the south-east. Hertfordshire and Hertsmere, which I have the privilege to represent, have a positive attitude to inward investment. There is real determination on the part of local authorities, businesses and communities to work together to create the right conditions for inward investment.
In 1992, the Hertfordshire development organisation was established specifically to promote the county to investors in this country and overseas. It has enjoyed some notable successes in attracting interest, but there is some way to go. My constituency has benefited substantially from inward investment, and is benefiting now from jobs and prospective jobs created by overseas investors. I enter a plea that when inward investment is being considered, the south-east should not be forgotten. Inward investment will receive a warm welcome there.
The south-east offers particular advantages to certain types of inward investment. It has an excellent, highly skilled labour force, good communications and a first-rate location in relation to the European single market. The latter is especially true of my constituency, which is particularly well located in respect of the road and rail networks.
Inward investment will not be attracted to any part of the UK unless it offers the right economic conditions. Although the Government have a role to play, and there is a place for partnership, we must not lose sight of the fundamental economic conditions that attract inward investment to this country and the link that investors see between those economic conditions, profitability and investment.
Some policies described by Labour Members in this debate give more than a hint of a return to high regulation, high taxation and the sort of labour practices that had such a disastrous effect in the 1970s.
This week saw the timely publication of a book on the Labour party's Commission on Social Justice. I have not yet completely mastered it, for it is a long read—perhaps it should be kept for sleepless nights—but its proposals

for what is described as intelligent regulation and its commitments to spending and taxation are unlikely to prove instantly attractive to inward investors, who would be most attracted by continuing the economic policies which have brought the UK such great and growing success throughout the 1980s and 1990s.

Mr. Frank Cook: I apologise, Mr. Deputy Speaker, for being late for the debate. I was unable to be here for the opening speeches as I had an appointment with my physician at the Middlesex hospital.
Before starting on the meat of my speech, if it can be called that, I shall comment on the remarks of the hon. Member for Hertsmere (Mr. Clappison), who tried to take my hon. Friend the Member for Middlesbrough (Mr. Bell) to task about his comments on tilt between outward and inward investment. The hon. Gentleman's remarks would have been a good deal more acceptable if he had given the full picture. In comparing Japan's attitude to Germany with that of the UK, his remarks would have been more acceptable if he had mentioned the high proportion of Japan's budget which is spent on research and development, unlike the position in this country. There are other aspects, too, to take into account, which would bear a good deal more honest scrutiny were any careful consideration given to those comparisons. Let us represent the facts properly, please, because that is what I am seeking today.
The hon. Member for Falmouth and Camborne (Mr. Coe) who, sadly, is not in his place, referred to the pipe dream of a single union agreement. I know that the hon. Member has been quick off the blocks today and that in the past he has shown a rare turn of foot. Indeed, with the rest of country, I have been electrified when I have seen him turn it on in the back straight and leave others standing, but we cannot let him skate over issues such as single union agreements. I must put it on record that long before the hon. Gentleman was beginning to go round the bend, I was concluding—having negotiated—single union agreements. He really ought to study trade union history a little more.
The hon. Member for Surrey, North-West (Sir M. Grylls) said that he did not know where the hon. Member for North Devon (Mr. Harvey) had been and criticised my hon. Friend the Member for Rotherham (Mr. MacShane) for quoting unfavourable statistics. If we are to be realistic, I do not know what we are supposed to do. The hon. Member for Surrey, North-West quoted Imperial Chemical Industries plc. If I went to some kind of progress meeting with ICI, as I used to do on a weekly basis, which was chaired by Denys Henderson or John Harvey-Jones, they would quickly tell me if I tried to ignore the disadvantageous aspects of the subject under discussion. So, any kind of selectivity or preference of statistics is, frankly, being dishonest with the nation and the sort of optimism which gave rise to the south sea bubble. Criticism of Opposition Members on that basis is therefore totally unwarranted.
The debate is liberal because it is simply a debate on inward investment. I would like to take the opportunity to take the subject out of the normal hack party and partisan point scoring which goes on in this Chamber in such a negative and fruitless way, and to talk about a subject which has been referred to on many occasions this morning—Samsung.


Eight years ago or thereabouts, Rediffusion, which had a production unit in Billingham in Cleveland and another in Shildon in County Durham, announced that, sadly, it was going to have to close. The staff at Rediffusion were largely female. They were all well skilled in the fine, manipulative skills necessary for small-scale work because they used to produce visual display terminals. As the hon. Member for Stockton, North at that time, I was anxious to preserve that unit, preserve the jobs and keep the team together, so I suggested that the planners and developers should turn their faces towards the far east because, as it happened, I had recently returned from a Select Committee visit to Japan.
Some time later, those planners and developers came back to me to tell me that the Japanese were not interested in investment in Billingham, but that a Korean company had been located which was interested but was disturbed by the then newly introduced European Community anti-dumping regime. When I asked about details of that, I was told that Samsung—the company to which they referred—was nervous that it would be unable to reach the required quota levels of indigenously produced components. As Brussels was very nervous about permitting the advent of another screwdriver operation simply to gain a gateway to Europe, Samsung did not think that it would be able to meet the requirements from Brussels.
When I asked the planning committee what it intended to do about that, it seemed somewhat nonplussed until I said, "It's pointless sitting here crying into our beer and wringing our hands; let's get off our seats"—I do not think that that was quite the word that I used—"and go to Brussels and argue the case." I led a delegation which included Councillor John Scott and the chief planning officer Russell Ward and we even took a member of the Conservative group to prove that we were of one political mind and not partisan. We went to Brussels and pleaded Stockton's case. We referred to the unemployment and the availability of already trained staff. We referred to the other advantages that we could offer.
The Commissioner and the directorate-general suggested that we should gain from Samsung an undertaking to help United Kingdom and European producers to lift their production levels and standards and specification to the level required for its components. We were told that if Samsung gave an assurance to assist in that process, Brussels would not for the moment apply the full weight of the regulations.
We brought that agreement back to Teeside and offered it to Samsung. On that basis, Samsung came to Billingham and took over the Rediffusion operation when it closed. Since then, Samsung has relocated and extended several times. It has a repeatedly proven production record which is exemplary by any standards and its industrial relations track record is there for all to see: it is flawless.
Furthermore, the company and its senior management have put down roots in the community. They have taken an active role in the Billingham international folklore festival, which is the pre-eminent event of its kind in the world. They have adopted a prominent role. They have become part and parcel of the community. That is an important point for me to register here today because of the comments that I am about to make.
Many claims and counter-claims have been made about Samsung's current decision to place its European headquarters not in Middlesbrough, but in Stockton. The headquarters will straddle the borders of Stockton and Hartlepool.
We are told that Samsung's decision was secured with the help of a regional selective assistance grant of £58 million. That is very true, but we must remember that the darling of this year's Conservative party conference, the right hon. but excessively ambitious Member for Enfield, Southgate (Mr. Portillo) has preached a faith which would eradicate that kind of support for such a move.
Nevertheless, credit for placing the grant on Teeside's table must be given to the Department of Trade and Industry. I give unstinting credit to the Department for that. However, we must remember that Lanarkshire, which was in competition for the establishment and which is already an enterprise zone and had all the inducements to offer that such status allows, was also offered a £58 million RSA grant.
That brings me to the comments of my hon. Friend the Member for Motherwell, North (Dr. Reid). At Scottish Question Time this week he said
that the package that attracted Samsung to the north of England was not the reported £58 million, but £71 million, the extra £13 million given in stealth being meant to counteract our enterprise zone status and financial assistance?"[Official Report, 26 October 1994; Vol. 248, c. 882.]
My hon. Friend is right. Extra moneys were offered for Samsung to come to Teeside, but it was not £13 million— it was £19 million. That £19 million was put together in a package by agencies such as Cleveland county council, Stockport borough council, Hartlepool borough council, the Northern Development Company, English Estates, Teeside training and enterprise council, and Cameron Hall Developments. There was a whole team working to attract Samsung to Cleveland.
My hon. Friend the Member for Motherwell, North. in putting his point, did nothing less than his duty. He has received information from a source of which I am not aware which leads him to believe that there was something unhealthy about the matter. It was entirely proper for him to put that question to the Secretary of State for Scotland and to seek an inquiry into the propriety of the deal.
I must say to my hon. Friend that the money was given not in stealth but in desperation, because the community badly needed that development. My hon. Friend accuses the Department of Trade and Industry of giving the additional money. I cannot believe that for one second. The only advantage to Her Majesty's Government of giving additional money would have been to safeguard the seats of the hon. Members for Langbaurgh (Mr. Bates) and for Stockton, South (Mr. Devlin). For the life of me, I cannot believe that they are worth £9.5 million each. It just does not make sense.
The simple truth is that credit must go to all the agencies which co-operated in successfully putting the package together. Credit must go to officers of Cleveland county council who captained and coached the team. Indeed, we must congratulate Bruce Stephenson, who led the team to Japan to play the final minutes of the game. Credit was given to Cleveland county council in particular by Sir John Hall, the chief executive of Cameron Hall


Developments—and, incidentally, chairman of Newcastle United, an eminently successful football team at the moment.
Sir John Hall also gave credit to the Minister, the hon. Member for Enfield, North (Mr. Eggar), for his support and assistance in securing the package. However, apart from giving him credit, I must do him the favour of pointing out that, as much as he was helping Teesside, he was also helping Strathclyde. I am pretty sure that he was also rendering the same assistance to Doncaster. My hon. Friend the Member for Morley and Leeds, South (Mr. Gunnell) pleaded for even-handedness. I am sure that he received no less than even-handedness from the hon. Member for Enfield, North.
I have not offered my comments in the spirit of cheap party hacking which occurs in the House and which I find fruitless and boring. I would not be here unless I was doing a proper job. It is about time we managed to focus our minds more positively, constructively and, dare I say it, in the national interest and in the interests of the people whom we represent, rather than in the interests of seeking cheap party political advantage. I am not talking to any party in particular, although it is fairly plain, bearing in mind the direction in which I am looking: I offer my comments for the good sense and the good health of the House because, by God, it is in need of an injection of good humour.

Mr. Nigel Waterson: It is a great pleasure to speak in this debate on inward investment because it is such an important subject for all parties and for all our constituencies. As the hon. Member for Stockton, North (Mr. Cook) rightly said, it is important to avoid petty party political points on this matter or, indeed, on any other matter. The hon. Gentleman sounds like an admirable candidate for the Privileges Committee because cheap party political points do not get anyone anywhere.
I shall make not a party political point but a point about the Labour party. Inward investment is important because of the jobs and prosperity that it brings to all parts of the country. It is also important because it is a touchstone—a sort of litmus test— as to whether the Labour party is new and has learnt any of the lessons of recent years. Sooner or later the sleaze smokescreen will lift, whether the allegations have been sustained or proven to be false and falsely motivated, and the Labour party will be left exactly where it was before, which is—to use the word of the hon. Member for Middlesbrough (Mr. Bell)—in a state of "drift" on matters such as industrial policy. We shall then be able to discover whether the new pistachio-flavoured, sharp-suited Labour party is any different from the old Labour party because in its heart it remains deeply hostile to inward investment.
As I said, inward investment brings prosperity and jobs. I shall use the analogy—I do not intend to be overly party political—of the road-building programme. For example, the Liberal Democrats are implacably opposed to building new roads on a national basis but incredibly enthusiastic about them on a local basis, in their constituencies. It has been estimated that since 1979, inward investment has created or safeguarded—the safeguarding of jobs is also

important—a total of 622,247 jobs in the United Kingdom, with some 51,920 in my region of the south-east. That is an important set of figures.
Surely, it must be a massive tribute to the Conservative Government's policies that people around the world are literally queuing up to invest in the United Kingdom. That is a far cry from the bad old days that I remember. I used to travel a great deal in my business before the Conservative Government as well as after 1979 and I can remember the attitude of sympathy and pity that I sometimes encountered in countries such as the United States with regard to the state of the British economy and British politics. What is now regarded as an aberration—for example, the appearance of Mr. Jimmy Knapp on our television screens—was almost a regular, if not nightly, event in those days. I do not think that I need remind hon. Members how disgraceful our industrial relations were in that era and how much of a disincentive they were not only to inward investment but to endogenous inward investment.

Mr. Coe: What does that mean?

Mr. Waterson: I am grateful to my hon. Friend; I wish that I could answer his question.
I shall refer to one classic example: Rover. How could Labour have got it so spectacularly wrong? On 31 January 1994, the hon. Member for Livingston (Mr. Cook), the Opposition spokesman on these matters, said:
Does not the Minister and those Conservative Members baying from the Back Benches understand the apprehension felt by Rover's work force today now that they have seen their company sold to BMW, with which they are in direct competition across Europe?
He went on to talk about promises made by BMW and asked what collateral the Minister held for those promises. He continued:
What assurance can the Minister offer those currently employed at Rover that their employment is as secure today as it was yesterday?"—[Official Report, 31 January 1994; Vol. 236, c. 620.]
Is not that the historical, kneejerk, typical Labour Member's reaction to any such deal?
Yet how wrong can one be? As we now know, BMW is to create 1,450 new jobs at Rover plants over the next six months. We have heard endlessly and rightly during the debate about the Samsung announcement of more and more jobs. It seems to me that the message has not yet got across to our friends in the Labour and Liberal Democrat parties about just how damaging their slavish support for the social chapter is. It seriously threatens the success that we need, about which the hon. Member for Stockton, North spoke with his usual eloquence.

Mr. Frank Cook: Will the hon. Gentleman give way?

Mr. Waterson: May I finish this point? Then I shall happily give way to the hon. Gentleman.

Mr. Cook: As long as the hon. Gentleman does not go off it.

Mr. Waterson: I promise that I shall not go off it.
It is clear that in France 29 per cent. of total labour costs go on non-wage social costs. In Germany the figure is 23 per cent. while in Britain it is just 17 per cent. Those are significant figures.

Mr. Cook: It is not for me to speak for the Liberal Democrat party. The hon. Gentleman can take my comments to represent the views of Liberal Democrat


Members if he wishes, or they can do so if they wish. The hon. Gentleman refers to the attitude of the Labour party in a derogatory way as if the party was opposed to inward investment. Let me put it on record that Cleveland county council, Stockton borough council and Hartlepool borough council are Labour controlled and the Northern Development Company is staffed largely by Labour politicians. I do not know how far the hon. Gentleman wants to take it. How much proof do we need to give?

Mr. Waterson: Nothing that the hon. Gentleman says cuts across what I said. I was drawing an analogy with the Liberal Democrats. Frankly, I regard the two parties as indistinguishable. Labour politicians locally are very much into the cracker barrel aspect of politics and the notion of getting jobs and trying to take the credit—where it is due, no doubt justifiably. However, nationally, there is an innate suspicion of inward investment. The suspicion of foreign interests taking over companies is unjustified.
I do not know whether the hon. Member for Stockton, North was in the Chamber when my hon. Friend the Member for Surrey, East (Mr. Ainsworth) said that the TUC had described one of the major Japanese investments as "alien". I think that I quote correctly.
I do not know whether hon. Members saw The Sunday Times only last weekend. It dealt at some length with inward investment in a long and perceptive article. It referred particularly to the French, who in the 1980s were terribly scornful of investment by the Japanese in Britain and even for a time, despite claiming to be more communautaire than anyone else, resisted the import into France of Nissans and Toyotas made in Britain. Jacques Calvet, whom hon. Members will instantly recognise as the head of Peugeot, memorably described Britain as an aircraft carrier for the Japanese. What are the French doing now? They are working terribly hard—at least as hard as us—to bring in foreign investors.
The Sunday Times article also referred to the fresh wave of investment from the so-called tiger economies, of which we have rightly heard a great deal during the debate—Korea, Taiwan, Singapore and Hong Kong. Samsung is not an isolated incident in the story. The article says:
In the last year alone, Kong Wah of Hong Kong has invested £9 million in a TV plant in Tyne and Wear; CMC of Taiwan has invested £26 million and is creating 550 jobs making floppy discs in Northumberland; and Siam Furniture has set up in Middlesbrough, the UK's first manufacturing investment from Thailand… up to 50 'tiger' companies may be investing in Europe in the next few years.
On the basis of recent history, we can say that the lion's share of those investments will come to this country.
I shall move closer to home, to my constituency, to share what is happening in Eastbourne and elsewhere. The Nobo group will be instantly recognisable to many hon. Members and is located in my constituency. It makes notice boards and visual aids—the sort of boards that one often sees in meetings to help the speaker make his or her point. Only recently—completion took place on the 21st of this month—it acquired De Visu and Lara, two French companies. That acquisition will nearly double the company's sales, which is quite something in itself. Estimated total sales of the combined companies will approach £50 million per annum.
Nobo's strategy is to be very much a United Kingdom manufacturer. As a result of the acquisitions, opportunities have arisen to expand its UK manufacturing base. That is

not merely good news for my constituency, as a 20,000 sq ft extension to its factory in Wales is nearing completion, as well as a 12,000 sq ft extension to its factory in Manchester. In Eastbourne, it has taken on an extra 40 employees, which is a 17 per cent. increase in the work force in the past three months, and additional factory space of about 7,000 sq ft is being rented. That means more jobs to come—not only new jobs created because of its expertise and ability to get even more out of the companies that it acquired, but the genuine possibility of importing jobs from France. Jobs that were in France might now come to my constituency, to Wales and elsewhere. There is no better example than that, to underline the importance of the fact that we opted out of the social chapter, and I am sure that we would all wish Nobo all the best in its continued expansion, especially under the expert helmsmanship of Reg Barr and Roger Colvin.
We have heard a variety of theories explaining why such companies are attracted to a particular country within the European Union and to particular parts of this country, whether the reasons be grants, labour costs or whatever. We underestimate at our peril the importance of a modern transport infrastructure. There are people in and near my constituency who oppose any road-building or road improvement scheme on principle—a combination of people whose homes are near the schemes, professional protestors and people with a political axe to grind. If we are to keep such companies and to encourage new ones to come, it is vital that we have a proper road and rail infrastructure linking us to centres such as London and to the channel tunnel.
I am delighted, as I know you will be, Mr. Deputy Speaker, that work on the long-promised A22 new route into my constituency is to start on 1 November. It is a £25 million scheme, which is backed by the Government. I hope that not too long thereafter work will start on the Polegate bypass and before too long I want a decision on the building of the improved A27 route from Levies to Polegate.
Several hon. Members have asked whether we are to become a low-wage economy. The expression "coolie economy" was used, but the precise context is unclear, so I shall draw a veil over that. I would like to refer specifically to a speech made in the past few days by my right hon. Friend the Secretary of State for Employment to the Institute of Personnel and Development. He said:
Low wage economies present formidable competition. Their wages are so much lower than ours that we cannot hope to compete by driving down our wage levels.
He added that Britain instead had to
climb the ladder of technology
and improve our competitive edge through creating products that owed more to
human knowledge than to human muscle".
That gives the lie to the obsession that some Opposition Members have that my right hon. Friend and other members of the Government are determined to drive down wage rates and to oppress the working man.
How good it was to hear that the hon. Member for Rotherham (Mr. MacShane) had met a foundry worker. I am sure that that was a deeply moving experience for the foundry worker, and it is good to hear that apparently there are now direct flights between Geneva and Rotherham.


I shall also talk about outward investment, because there was the old suspicion in some of the speeches from the Opposition Benches that inward investment really means big corporations from abroad taking control of British companies and factories to the detriment of the British people. But we should remember—in fairness, this point was made by more than one hon. Member on both sides of the House—that the UK is second only to the US in terms of outward investment, and that we are even ahead of Japan. In 1992, our outward investment totalled about £100 billion. The example that I gave of the Nobo company in my constituency shows that side of the coin as well.
I wanted to finish by mentioning Labour's "Business Plan for Britain", which was published earlier this year. It is not what I would describe as a gripping document, but it is certainly worth reading. It is a fascinating document, with some wonderful echoes of the past in this country.
I think that the best comment on that document came from Stanley Kalms, the chairman of the succesful Dixons group—we might well expect similar comments from foreign investors if there were ever the remotest possibility of another Labour Government—who wrote in a letter to The Times on 11 February:
I had an awful sense of having been there before. We went through all this in the 1960s and 70s, and it did not work. British business doesn't want a national plan. It wants low inflation, it wants low interest rates, it wants good industrial relations. But some great blueprint drawn up by civil servants, politicians and economists—no thank you".
I do not think that I can improve on those eloquent words from somebody who really should know about these things. I am delighted to have been able to participate in this important debate.

Mr. Peter Ainsworth: I should like to begin by endorsing wholly what my hon. Friends have said about the importance of outward investment, as well as inward investment. My hon. Friend the Member for Hertsmere (Mr. Clappison) made a compelling case on that point, and my hon. Friend the Member for Eastbourne (Mr. Waterson) has just illustrated clearly how outward investment can be of great benefit to British firms.
When we look at trade and investment, we are talking about a global situation, global movements of money, global telecommunications and global brands, trades and competitiveness. The hon. Member for Middlesbrough (Mr. Bell) rightly said in his opening remarks that it is no good for the UK to be isolated, and that we could not be entire of ourselves. The idea of Britain being isolated would have seemed absurd to our ancestors, who knew perfectly well that Britain's best interests lay in the world outside. Yet it seems to me that, in the course of this century, we went through a prolonged period when we were isolated from the rest of the world and when we started to focus not on what we might offer the world, but on our internal problems, issues and difficulties.
We are all familiar with the performance of the British economy during the 1960s and 1970s. Whatever the party political arguments, there is no escaping the figures. Britain went through an extremely bad patch. However, it is often a salutary reminder to look further back. For

example, manufacturing productivity between 1880 and 1914 grew by less than 1 per cent. The problems are deep rooted and long-standing and, as my right hon. Friend the President of the Board of Trade said, reversing more than 100 years of relative economic decline is not an easy task.
During the 1980s, the reverse began. Manufacturing productivity grew faster in the United Kingdom than in the United States, France and Germany. As was said earlier, our share of the volume of world trade stabilised during that period, which was important, and our overall growth rate began to match that of our competitors in Europe. In short, confidence started to return and Britain began to find a role again—one that built on our ancient strengths, such as language, our links with the wider world—not just the European Union—and our belief in free trade. That role is constantly evolving to meet the ever-changing challenges of the global market, where inward and outward investment are expanding. Our exports are rising strongly, especially to countries where economic growth is fastest. They are not yet our most important export markets, but we are making great strides in the most rapidly growing areas of the world.
The United Kingdom is the world's largest outward investor after the United States. What matters most is where that outward investment is going. Currently, the great majority goes to highly developed countries such as the United States and the other European Union countries. Those large markets are important and always will be, but they are not the fastest-growing markets in the world. Over the past 10 years, our average return on outward investment has been about 10 per cent. It is my hope—and I believe that it is Government policy—that we reinvigorate our attempts to get capital into the parts of the world that are growing fastest and where the return will be greatest. We are making significant progress in that, but there is still much to be done.
Most importantly, perhaps, we have learnt to adapt to the globalisation of trade by making ourselves available to inward investment. We have heard much today about the rewards from that. We want to import capital to build up our industrial base, to import the skills and working practices of overseas companies and to learn to adapt to and accommodate new ideas.
The Trade and Industry Select Committee report, "Competitiveness of UK Manufacturing Industry", has an important section that states:
Apart from new jobs and improvement in the balance of trade, the main advantage"—
of inward investment—
is the dissemination of new management practices to other parts of UK manufacturing, through direct influence on suppliers, the example provided to competitors and others, and (eventually) the movement of personnel.
The report continues:
Some of the new practices, such as partnership relationships between customers and suppliers and the 'empowerment' of workforces, are radical changes from past UK practice, and would have been difficult to bring about in any other way.
I believe that to be very much the case.
Everybody in the developed world, certainly in the European Community, aims to attract inward investment. As has been said in the debate, we are attracting far more than our fair share, and we are entitled to ask why that might be so. The first reason is that we have a large and skilled work force—the second largest in the European


Community. We have heard much today about manufacturing and about the north-east, which is fair because a great deal has been achieved there.
My hon. Friend the Member for Hertsmere made the point for the south-east, and I should like to emphasise non-manufacturing skills, because we also have enormous skills in the service sector and are attracting a lot of inward investment in terms of corporate head office relocations in service industries. I have yet to have it confirmed, but I heard today the remarkable news that the Deutsche Bank in Frankfurt has decided to establish the headquarters of its investment bank in the City of London. Had anybody told me that a few years ago, I should not have believed it.
The service industry has a role to play. Many Opposition Members spend a lot of time discussing manufacturing. I have no problem with that, but in our attempt to stress the importance of manufacturing, we must not begin to turn the tables of argument against services, which are huge employers and great businesses.
The result of all that inward investment is, as my hon. Friend the Member for Hertsmere said, unequivocal good news for Britain's productivity, manufacturing, exports and, above all, jobs. It would not be reasonable for the Government to claim the entire credit for that good news because a great deal of credit must go to the people in those businesses who make the environment attractive to outside investors, as well as to the managers and people on the shop floor who are making it happen. They are now going out into the world in a way that was not done for far too many years, and selling Britain to the world.
An example of that is taking place in Surrey, where my constituency is located. We have already heard an advertisement for Hertfordshire, so I shall now advertise Surrey. About a year ago, a remarkable organisation called Surrey First was established. It is a partnership between the county council; the DTI, which has put in some pump-priming funding through the local TEC; local businesses; and the university. All those groups have got together to spend not enormous sums of money but a little money wisely to promote the attractions of Surrey to the outside world in order to attract inward investors.
In the past few days, Surrey First has produced a brochure. We have heard much argument today about what business men do or do not look for in Britain when seeking to relocate and invest and whether they look at such matters as wage rates. The brochure is clear evidence of what business men really believe in. The companies behind the Surrey First scheme include Sony, Ericsson, Colgate-Palmolive, and Procter and Gamble, and they give their reasons for investing in Britain. The first reason is low labour costs, the second is record productivity and the third is low taxation. The companies mention the lack of exchange control, the skilled work force and low inflation. They say that 24-hour, seven-days-a-week production is standard in many industries. Those are the reasons that international business men give for investing in Britain and I hope that that settles the argument once and for all about the importance of having a flexible labour market. Opposition Members have been doubtful about that. I have quoted what the business community is saying.
I shall spare my blushes by not doing on to read out the section of this excellent book that says:
Why Surrey represents the best in Britain.

"However, I must tell my hon. Friend the Member for Hertsmere that we are highly competitive with Hertfordshire and that we shall give it a good run for its money.
The hon. Member for Middlesbrough made a good point when he said that we live in the real world and that the real world involves some form of selective Government assistance. No Conservative Member would disagree with that. The other important point to bear in mind is that in the real world, there is no point in putting taxpayers' money into industry if the basic requirements are not being met. Our worry is that the Labour party's policies would ensure that those basic requirements were not met.

Mr. Paul Boateng: Nonsense.

Mr. Ainsworth: The hon. Member for Brent, South (Mr. Boateng) says that that is nonsense. Not only Conservative Members, but the Financial Times disagrees with his analysis. Last year, the paper said:
Labour's corporatist, interventionist instincts are alive and putting the boot into the free market. Those who thought Labour had forsaken the 'profits are dirty, bash big business' mentality of the post-war decades are in for a rude awakening.
On almost every front, in terms of the key criteria that international business men hope to see in a country in which they are looking to invest, Labour policies would be disadvantageous. Labour would reduce the flexibility of the labour market. Labour would, of course, build a relationship with the European Community and we are all in favour of that, but it would also bind Britain to the social chapter and to rigid, dirigiste employment formulas that do not reflect real life.
Labour would substantially put up rates of corporate tax. I notice that the proposals by the hon. Member for Dunfermline, East (Mr. Brown) to close loopholes, as he put it, in the corporate tax system were interpreted as follows by Mr. Howard Davies, the director general of the Confederation of British Industry. He said:
what Gordon Brown is talking about on the business front is not a `loophole closing exercise' at all, rather a massive increase in business taxation … an almost 25 per cent. increase in the current corporation tax yield.
That is hardly likely to attract Japanese investors and other investors whom we need so much if we are to continue to build our economic prosperity.
What would Labour do on the important front of deregulation, where the Government are making determined strides to cut red tape and to get the bureaucrats off the backs of our business men? The hon. Member for Livingston (Mr. Cook) said of the deregulation initiative that it was an attempt to extend new killing fields to industry. The hon. Member for Cannock and Burntwood (Dr. Wright) said in a debate on deregulation that in the old days, Labour thought that an element of state control was needed to bring a social benefit into industrial policy, but that now it could do so with regulation. I fear that that is not the message that international business people want to hear.
The hon. Member for Morley and Leeds, South (Mr. Gunnell) made an excellent point against himself in his long speech. I was listening carefully, and the hon. Gentleman dwelt at some length on the extreme concern in the international business community about the, albeit remote, prospect of a Labour Government in the United Kingdom. After the debate, the hon. Member for Brent,


South will be interested to read at his leisure what his hon. Friend the Member for Morley and Leeds, South said on the subject. It was the only true comment that he made during his long speech.
The growth in world trade, the economic regeneration that has occurred and is continuing to occur in this country, and the opportunities that are opening up for inward and outward investment are fundamentally the product of capitalism. The House would do well to remind itself of that fact. Those developments are not the product of socialism, however prettily dressed up or nicely presented.

Lady Olga Maitland: I welcome this important debate on inward investment. I particularly welcomed the exuberant and competent speech by my hon. Friend the Minister, who told the House about our tremendous success story over the years. I found it strange that, when the hon. Member for Middlesbrough (Mr. Bell) replied, we listened to him for 50 minutes and did not once hear from his lips a single Labour party policy to attract inward investment. That may have been because Labour Members know that, if they told the truth, inward investors would run away.
When challenged, the hon. Member for Middlesbrough chose not to develop the theme of Labour's socialist planning. It is not surprising that he did not examine the cost to industry caused by a Labour party policy such as its commitment to the social chapter. It is right for Conservative Members to draw attention to the weaknesses of that policy, but I want to focus on the minimum wage.
The Opposition have failed to understand that, if they introduce a minimum wage, they increase wages. If one man's wage is increased, the price of the product is increased and another jobless figure is created because another man will be put out of work to support that job increase.

Mr. Boateng: How many jobs have the exorbitant increases given to the chairman and directors of numerous privatised industries cost? How does the hon. Lady justify her attack on the minimum wage when, time and again, company directors have awarded themselves, or had awarded to them, increases out of all proportion to their own productivity? Is not the hon. Lady applying double standards in this case, as in so much else?

Lady Olga Maitland: I fear that the Opposition have been stung. The hon. Gentleman should have been asking why 1,000 German companies have chosen to come to Britain. It is because we have not signed up to the social chapter. We need to concentrate on the real issues, rather than trying to create a fog.
I shall focus on the investment that we receive from Japan. At present, 41 per cent. of Japan's inward investment into Europe comes directly to Britain. Germany attracts just 9 per cent., and France even less. In total, the United Kingdom benefits by £29 billion, embracing an estimated 75,000 jobs—a success story. Overall, inward investment from all over the globe has brought nearly 52,000 jobs to the south-east.
My constituency has benefited to that end. Overseas investors say that they are attracted by a combination of factors. Good communications are important. On that score, I totally beat both Hertsmere and Surrey, for Sutton has excellent access to two major airports— Gatwick and Heathrow. My hon. Friends cannot beat that. Furthermore, in respect of Japanese inward investment, we can offer a number of excellent golf courses. That is not a major reason for coming to our part of the world, but it is an important factor.
More serious factors have been mentioned by a number of my hon. Friends, notably by my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley). English is a common business language, and the UK has a well-trained work force at reasonable cost and good labour relations. The size of our domestic market, good co-operation between local and national government, good infrastructure and the speed at which overseas companies can set up new plants are other considerations.
Perhaps the most important factor of all is the UK's membership of the single European market. It is seen as an asset, while at the same time making it possible to obtain the best deal. It ensures that employers are not shackled by the social chapter of the Maastricht treaty, and preserves employers' freedom from over-regulation and under-flexibility of labour. In short, the UK provides a good jumping-off point to the rest of the continent. It embraces the best of the European Union and sidesteps the worst.
I make no apology for repeating the point made earlier that it is not surprising that Jacques Delors said of our opt-out that Britain would become a "paradise for Japanese investment". That point was not lost on UK industry. In June, a Gallup survey revealed that eight out of 10 of Britain's top companies supported opting out of the social chapter, and the same proportion believed that Labour's commitment to signing the social chapter would damage British business.
In a memo to the Trade and Industry Select Committee when it was inquiring into the competitiveness of UK industry, Toyota said that it chose the UK as a base because Europe is seen as its best single market, and that Toyota had long held the view that it was beneficial to manufacture products in or near the place where they are used. Hence the attraction to Toyota of being based in Britain, close to what it sees as its biggest single market.
Toyota said that the UK already had a reasonably sized domestic market, a tradition of car manufacturing, and a work force well equipped to produce quality work. Other companies have also made the point that being based in England provides them with good access by air to the continent.
However, some take a different view. Earlier this month, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) said that Britain should think again about whether it should remain a member of the European Union. He said:
One day it may mean contemplating withdrawal … As a former Chancellor, I can only say that I cannot pinpoint a single concrete economic advantage that unambiguously comes to this country because of our membership of the European Union.
Predictably, those comments were headline news within hours. Not so predictable was the reaction overseas.
Little did my right hon. Friend realise that, as news of his speech percolated through to Japan, the telephones began to ring at the British embassy in Tokyo. During my


visit to Japan last week with the Education Select Committee, I was told that concerned business men were asking whether it was really true that Britain was planning to withdraw from the European Union—because if so, they would have to rethink their strategy. They want their companies based in the European Union, not outside it.
The UK's membership of the European Union on our terms, unshackled by burdensome restrictions, is what makes it so attractive. Overseas companies consider it more important to be in the European Union than to try to sell into Europe from their domestic locations.
A good example of the response comes from the international toy-making company Tomy Toys, whose European headquarters are in my constituency. It is the main distribution point for this country and the whole of Europe. The managing director left me in no doubt at all where the company stood. He told me:
Mr. Lamont's proposal is positively detrimental. The implications are extremely serious for us. We regard Britain as our flagship in Europe and jumping board to the rest of the continent. Our board of directors in Tokyo chose Britain because of its membership of the European Community.
If Britain left the EC we would not wish to become isolated from the rest of Europe. I have no doubt we would move our main operations to Brussels leaving a small English company here.
Indeed, the net result would be redundancies and job losses.
More significantly, the many companies which benefit from subcontracted work would lose out as well. Tomy's contribution in the United Kingdom to income and jobs for others who support them is very significant. For example, all the advertising and public relations agencies which have earned millions popularising brand names would be affected. All the millions that go to transporting the toys would be lost as well. The toys, in future, would go straight to Brussels. Therefore, P and O shipping would be badly hit. Jobs would undoubtedly suffer.
The same would be the case for British companies which had been contracted to make toys. At present, a toy factory in Essex is poised to land an excellent contract, which would mean more local jobs. It won that contract in the face of stiff competition, but it would shrivel away.
A Britain outside the European Union would mean that those contracts would go elsewhere. The director of Tomy concluded:
Our work in Britain would be severely curtailed. We have no intention of operating outside the European Union.
They are sobering words indeed.
Another company, Nissan, made a similar point when it said that, after having invested £900 million, if Britain were to move outside the EU, it would cease future investment here. Nissan, too, has plants in other parts of Europe, especially in Spain, which would benefit, not Britain. That would be a great pity, bearing in mind that Britain has been such an attractive inward investment jumping board. To kill the very advantages that we have built up would be, to my mind, totally pointless.
We have a tremendous track record. I emphasise that we must keep the very best, we must fight like tigers in the European Community to maintain our standing. I do not believe that it is a foregone conclusion that we would lose any of our ground. It is the Opposition only who are making such assertions, which are totally erroneous. We tell a success story, and we should continue in that area of business.

Mr. Nigel Evans: I am grateful to be able to contribute to this rather important debate. We have heard advertisements for the attractions of inward investment in all parts of the United Kingdom. Now it is time to listen to the voice, if not the accent, of the north-west of England, where, I suppose, in many ways, I am an example of inward investment from Wales.

Mr. Charles Wardle: A highly successful example.

Mr. Evans: If you say so, Minister.
I am extremely grateful to be able to point out some of the attractions, not only of the north-west, but of the United Kingdom. During the debate, we have heard the roll of honour of companies who have come to the UK from all parts of the world. They could have set up in various other parts of the European Union and taken the advantages of the Union, but they decided to come to the UK, and for very good reasons.
It has been estimated that inward investment in the UK affects around 275,000 jobs, but when families are brought into the equation, we are talking about more than 500,000 people. I do not need to over-emphasise the fact, because it speaks for itself how important those jobs are. One of the major attractions to inward investment is the Government's approach, which stresses free trade to maximise world economic growth, as seen by the Government's role in the GATT talks. That economic policy aims to create an arena for lasting growth. As has often been said, it is a policy of deregulation—I had the benefit of being a member of the Standing Committee which considered the Deregulation and Contracting Out Bill—which attracts inward investment.
Various other factors are important. They include creating the right environment. That is what the Government are doing. They also involve low inflation. I was rather surprised that the hon. Member for Middlesbrough (Mr. Bell) referred to inflation. I should have thought that Labour Members would be the last people to draw attention to inflation.
Industrial relations have also greatly improved as a result of the changing policies for trade unions. Productivity has been enhanced. When that is coupled with a lower tax environment—more so than our partners overseas—we can understand why foreign investors wish to come here.
One of the greatest achievements of my right hon. Friend the Prime Minister related to the negotiations on the opt-out in respect of the social chapter in the Maastricht treaty. There is now increasing support for our opposition to that absurd piece of socialist claptrap. If people want socialism in this country, they have an opportunity to vote for it in general elections.: they certainly do not want it to be rammed down their throats from the European Community. Such a policy could only cost jobs. Clearly, our refusal to sign up to it has encouraged inward investment at the expense of our European colleagues, as we have heard from Jacques Delors.
The north-west is doing extremely well with regard to inward investment. Much of that must be due to INWARD, the agency in the north-west. Much reference has been made to partnership in the debate. INWARD's latest report reveals the partnership between leading figures in the north-west, all the major local authorities—


including, I am proud to say, Ribble Valley and Preston councils and Lancashire county council—and a host of major industries which are keen to see other industries come in and enjoy the skills and advantages that we have to offer in the north-west.
In September, INWARD announced that, in the last six months, it has attracted 25 new inward investments involving £90 million-worth of direct capital investment, with more than 1,300 jobs being created or safeguarded. Much of the credit for that must go to the managing director, Basil Jeuda.
INWARD is fortunate because the product that it is selling has a relatively highly skilled work force. In that regard, I draw the attention of the House to ELTEC, which is the training and enterprise council in my area. It is doing so much to ensure that we have investment in the training force of the north-west with Investors in People, and that as much as possible is done to take advantage of national vocational qualifications and the GNVQ in schools. ELTEC is playing an important role in the region to ensure that, when companies come to the north-west, they can take advantage of a properly trained and skilled work force.
I said that we have done rather well in the north-west, but we could do even better. We have a wonderful infrastructure, but it could be improved. Manchester airport is the 16th largest international airport in the world. With the recently announced "open skies" policy, Manchester airport will do even better in future. There has been wonderful investment in Manchester airport, and I hope that there will be further investment to ensure that it does not lose its role as an important regional airport.
We believe that more freight should be carried by rail. In that regard, there should be more investment in the west coast line, to ensure that we have the proper infrastructure to carry goods. While there should be investment in rail, there should also be investment in roads. There should not be investment in one at the expense of the other. Anyone who has travelled down the M6 to the M5 will be aware of the massive bottleneck that people face whenever they approach Birmingham. That can add one or two hours to journey times. We must ensure that there is a balanced approach to road, rail and air infrastructures.
We have seen some fantastic successes in the north-west. Last month, I visited 3M in Clitheroe, and I saw its wonderful work in precision metering aerosol valves which are used by asthmatics. Also, there is research into producing chemicals to replace chlorofluorocarbons, so that we do not damage the environment. That is a result of the protocol we signed, and it is to be applauded.
At the Conservative party conference, I was able to see what Nynex was doing in Bournemouth as a forerunner of what it will do in our area. It has already announced a £1.2 billion investment in what is called the super-highway. That must be welcomed as well. The project will be worth 5,000 jobs.
Champion Spark Plugs, an American company, has its headquarters in the Wirral. Sanko Gosei, a Japanese firm and one of the world's leading, plastics technology companies, has its European base in Skelmersdale. New Balance has found the north-west an ideal location for the

manufacture and distribution of its performance athletic shoes. Its European headquarters are in Warrington, and its manufacturing facilities are in west Cumbria.
INWARD has convinced the Siemens Group of the advantages of its newly developed gas meters being manufactured in Oldham rather than in Germany. That has resulted in that German company investing almost £10 million in the region, and safeguarding more than 100 direct jobs.
I am proud of the investment in the north-west. I have much information on the Labour party's reaction to it, but, because of the new-found partnership with the Labour party, I shall put it to one side. [Interruption.] I shall keep it. I had hoped that Labour Members would say something, but they did not. We have become used to that.
We must continue to attract as many companies as possible. The Government's policies are the right ones to do so. It would cost thousands, if not millions, of jobs if we turned our backs on those policies and followed the Labour party's policies.

Mr. Bell: With the leave of the House, I shall respond briefly and without too much detail.
I welcome the Minister to the Dispatch Box in his new capacity in respect of trade and industry matters. I am sure that he will enjoy future debates as much as he has enjoyed this one.
The hon. Member for Ribble Valley (Mr. Evans) caused me to have an hallucination at the Labour party conference. I wondered whether I had had too much to drink, too much to eat or too little sleep, because there he was, promenading along the corridors of the great and the good. I was relieved to learn that he was doing a Granada Television programme.
The hon. Gentleman made an important point about something that I tried to say—probably not too well—which was that our infrastructure is one reason why we attract inward investment. Our present infrastructure must be improved.
I wish to rectify one slight point. The hon. Member for Derbyshire, South (Mrs. Currie) said that in 1993 the United Kingdom was host to more inward direct investment than any other European Union member state. I said that in 1992, the latest year for which comprehensive information is available, the United Kingdom was host to 11.5 per cent. of global inward direct investment and was the third most important host country after the United States and France. There was no contradiction between us. I wish to record my appreciation of the Library's work in producing its research document at such short notice.
The debate wandered a little. I was accused of asking the country to adopt Albanian-style policies. I do not quite know—

Mr. Peter Luff: They were Romanian.

Mr. Bell: No, that was my hon. Friend the Member for Rotherham (Mr. MacShane). I was accused of Albanian-style policies. I have been almost as maligned as the right hon. Member for Kingston upon Thames (Mr. Lamont). He was the ghost at the feast, wandering along the corridors of the House and on to the Floor of the House without being mentioned.


I appreciated the interventions of the right hon. Member for Tonbridge and Mailing (Sir. J. Stanley) and of the hon. Member for Falmouth and Camborne (Mr. Coe), who made a constructive speech in the interests of his area and of the wider subject. My hon. Friend the Member for Rotherham was maligned; somehow Geneva and Rotherham were linked. A foundry worker ended up being a resident of Geneva. These things happen in debates on Friday.
My hon. Friend the Member for Morley and Leeds, South (Mr. Gunnell) made a weighty contribution that added considerably to our knowledge of the subject. He made the important point, which was taken up towards the end of the debate, that it does not do our country any good to threaten or warn that the introduction of the social chapter by a future Labour Government would diminish inward investment. Anything that can weaken confidence abroad is not in the interests of the United Kingdom. I am pleased to see the hon. Member for North Devon (Mr. Harvey) in his place because he made a cogent intervention as well.
I was grateful for the intervention of my hon. Friend the Member for Stockton, North (Mr. Cook) because he was able to put the investment from Samsung into a context that we had not had previously, taking us back to the days of Rediffusion. He mentioned the chief executive of Cleveland county council, Bruce Stevenson, whom I met on a plane to London. I asked him where he was going and he said Seoul, South Korea. Cleveland county council put a lot of effort into attracting the Samsung contract to that area, and got it.
We must put inward direct investment in context. In 1993, we had inward investment of £9 billion. Our total gross domestic product was £630 billion, our total fixed investment was £95 billion, our total exports of goods and services were £158 billion and total expenditure on mergers and acquisitions of industrial and commercial companies within the United Kingdom was £7 billion.
Labour has constantly supported the concept of inward investment; no one would be foolish enough to say that it has not. The hon. Member for Eastbourne (Mr. Waterson) referred to inward investment into Middlesbrough. What we want is a balanced debate and a balanced argument, taking inward and outward investment together. If we held the sort of debates to which my hon. Friend the Member for Stockton, North referred—less partisan and more constructive debates—there would be an echo from the public.

The Parliamentary Under-Secretary of State for Industry and Energy (Mr. Charles Wardle): I hear what the hon. Member for Middlesbrough (Mr. Bell) says. When he and his colleagues appear to be on weak ground, they talk about a less partisan approach. I do not doubt the sincerity of his suggestion that he and his colleagues believe in inward direct investment. However, in speech after speech, we heard that there is a contradiction in saying that and at the same time subscribing to the idea of the social chapter, as the Labour party does.
We have had a thoroughly interesting debate. We had some powerful speeches from hon. Members on both sides of the House, and I am delighted to have the opportunity to respond in the few minutes that remain.
As my hon. Friend the Minister said so clearly, eloquently and rigorously at the outset, inward investment is a key element in improving competitiveness. It creates employment, offers important new opportunities for suppliers and challenges established United Kingdom companies to improve their performance, as several hon. Members said. Our record in attracting inward investment is second to none, but that does not mean that there is room for complacency.
In inward investment, as across the whole competitiveness agenda, we need to go on improving our performance ever more. Improving competitiveness is not a one-off objective; it is an on-going process with no end date. It requires continual, incremental business. It is a tough business.
As for tough business, we listened to the hon. Member for Middlesbrough for about one hour. He had some fascinating things to say and I listened with respect and interest. I am always interested in history. The hon. Gentleman talked about the important industrial history of Cleveland over a span of some 150 years. With great respect, I do not dispute the importance of the number of warships that were built in the past century, but it is productive investment for the next century that we should be concerned about in this debate.
Once or twice, the hon. Gentleman resorted to the old music hall jokes which are tried by his party. He talked about the last two world recessions as though they had been the responsibility of this Government. I suggest that he talk to people employed in France, Germany, and many other countries which have experienced recessions to see whether that is the case. Just for good measure, he threw in a word about the City of London, and that was fairly disparaging.
The hon. Member for Middlesbrough, like several hon. Members, spoke about labour costs. It is worth pointing out that labour costs in Germany are 93 per cent. higher than in Britain. In Belgium they are 64 per cent. higher. In the Netherlands they are 56 per cent. higher and in France they are 29 per cent. higher. There is no doubt that a considerable element of that is the social payroll costs which are add-ons. That is not to say that that represents good management in any sense. It does not. We should leave individual companies and managers to decide how to meet those responsibilities. That is what counts.
It is worth highlighting that between 1987 and 1993 the stock of United Kingdom inward investment more than doubled. In 1987 it was some £63 billion. In 1993 it was £131 billion. It now represents 17 per cent. of all Organisation for Economic Co-operation and Development inward investment stock. That is to he compared with the fact that Britain has some 6 per cent. of OECD gross domestic product.
My right hon. Friend the Member for Tonbridge arid Mailing (Sir J. Stanley), in an extremely interesting arid powerful speech, talked about the key elements which cause foreign companies to decide to invest in Britain arid to have British operations. He talked about a competitive cost base. He talked about the stability of the industrial relations climate that has been achieved in Britain, so largely as a result of the industrial relations legislation introduced in the past decade. He talked about the fiscal regime and about language. Of course, he as right on all those counts. That was acknowledged generously from the other side of the Chamber.
I wonder whether I might add two other elements which I believe are almost as important. I certainly heard about them during a recent trip to Japan, Taiwan and Hong Kong in pursuit of further inward investment into Britain. One key element was that when an overseas company makes an investment in Britain, its subsidiary here is regarded from day one as a British company. No one knows that better than Japanese automotive companies such as Nissan. When Nissan began to build on its success here and wanted to export to the huge market among our partners in the European Union, some countries, particularly France, wanted to challenge the fact that the products were British. But they are British: whatever their ownership in this new global theatre of business, those companies are British companies.
The second key element, which was alluded to by the hon. Member for Stockton, North (Mr. Cook) when he spoke about Samsung, is the approach of services. We do not merely promise companies that they will be well received before they come here. When they have set up and begun operating, the services provided by the Department of Trade and Industry, other Government Departments and most definitely local agencies and local authorities all show a willingness to help and a friendship about which I heard time and again during the recent visit to which I have just alluded.
The hon. Member for Rotherham (Mr. MacShane) raised the subject of endogenous growth theory. I was glad to hear him suggest that the shadow Chancellor should put that sort of jargon into English and that he shuddered when the shadow Chancellor spoke in that fashion. Don't we all—I am sure that Conservative Members do. The hon. Member for Rotherham talked as though a high-wage economy was not an ambition of this country. Of course it is. That is what my right hon. Friend the Secretary of State for Employment said the other day and has said repeatedly. It can be achieved by gains in productivity. That is the important thing, provided that we do not succumb to a series of runaway payroll costs and add-ons such as those in the social chapter which make that difficult.
My hon. Friend the Member for Falmouth and Camborne (Mr. Coe), in an excellent speech, was right to highlight the success of supply side reforms, trade union reforms and the need to contain social and welfare costs, as he put it. Surely, as he said, we must remain free to tailor our employment and social policies to our own needs. Let management manage. We must not impose the rigidities and burdens on employers that some centrist organisations have ambitions to impose.
My hon. Friend the Member for Falmouth and Camborne also referred to the multiplicity of organisations dealing with the business of attracting inward investment. The Government offices and the DTI sector divisions have developed plans to ensure that we are more focused and to follow up on the White Paper on competitiveness. Their aim is for an altogether more coherent structure.
My hon. Friend the Member for Falmouth and Camborne will be aware of the appointment of the chief executive for the Invest in Britain Bureau, who set among his priorities the requirement to focus on client needs and to think in terms of aftercare. It is all very well always looking for new companies to invest in this country, but

as time passes we must ensure that we talk to the companies that are here about their needs—to return to what the hon. Member for Stockton, North said—and that in the process we identify their plans and are there in support.
The hon. Member for North Devon (Mr. Harvey) spoke of the need to compete with our rivals in high technology. In fact, more than 90 Japanese companies have established research and development facilities in this country many of which are linked to British universities for applied research.
My hon. Friend the Member for Surrey, North-West (Sir M. Grylls) was absolutely right to extol the achievements of the major British players in global markets and to talk of our success overseas. As they are producing in this country and exporting abroad, it is worth bearing in mind the fact that between 1985 and 1991 the league table for average annual percentage change in output per hour in manufacturing reads Japan 4.4 per cent., the United Kingdom 4 per cent., France, Italy and the United States 3 per cent. and Germany down at 1 per cent.
As my hon. Friend the Member for Surrey, North-West described the attractions of investing in this country, it is worth echoing the words of Ambassador Kitamura, who was until recently the Japanese ambassador here. He recently addressed an "Invest in Britain" seminar in Tokyo, which I also addressed. He said:
We see Britain as the trailblazer for an open trading Europe.
As my right hon. and hon. Friends have said, that is due to our attitude to the social chapter, but it is also due to progress with the single market—implementing all those measures and in many cases taking the lead in doing so—and to taking the lead in market liberalisation.
One brief example is gas—gas delivered on the beach in this country costs about the same as gas delivered to the frontier of most of our European Union partners, but gas delivered to the domestic household and industrial user tends to be substantially cheaper because we have taken the first steps in the liberalisation of that market. That is a very useful pointer.
The hon. Member for Morley and Leeds, South (Mr. Gunnell) mentioned the Yorkshire and Humberside Development Association and I agreed with much of what he said. The association was most successful and what he said about partnership is absolutely right. I will give him the figures for 1993–94–1,906 new jobs were created and 3,998 jobs were safeguarded, making a total of 5,904.
The hon. Member for Morley and Leeds, South also talked about single union agreements —as did one or two of his colleagues—and it is worth bearing it in mind that if we had not changed the climate or introduced industrial relations legislation, those achievements would never have been made. One need only hark back to 1987—the House will correct me if I have the date wrong—when the Ford motor company was contemplating investment plans in Dundee and was seeking a single union agreement, and the trouble that it landed in because of intransigence on the part of the Transport and General Workers Union and other unions. I am delighted that we have moved past that, but let us give credit where it is due. It is due to the changed climate achieved by my right hon. Friend the Prime Minister and his predecessor.


In an absolutely excellent and fluent speech, my hon. Friend the Member for Hertsmere (Mr. Clappison) highlighted the upward trend in inward investment during the 1980s and 1990s. He was absolutely right to say that it is complete nonsense to suggest that we can somehow look to the good old days of the 1970s and imagine that things were just as good then. It was not a golden era. Anyone who remembers high inflation, the talk of the "British disease", the brain drain, the low morale in so many factories, the then Chancellor of the Exchequer going cap in hand to the International Monetary Fund, the message from the IMF that we had to get our public spending in order if we were not to go bankrupt, will know what I mean.
My hon. Friend also made a powerful plug for greater inward investment in the south-east, and he echoed a number of my hon. Friends in doing so. He was right to highlight that matter. The south-east is a varied region which does not easily lend itself to a single marketing approach. But it is important to avoid a fragmented promotion which confuses investors. We are looking to tackle precisely that challenge.
There are, of course, other examples as well as Nobo, the company mentioned by my hon. Friend the Member for Eastbourne (Mr. Waterson) in an excellent speech. There is also Daewoo, which established a research facility in Worthing, and the Oracle corporation of the US which is doing well in the Thames valley. The Swiss electronics company Huber and Suhner is another example of that kind of success.
I have already alluded to the remarks of the hon. Member for Stockton, North. He spoke of the Japanese belief in research and development, and I hope that he will take heart from the fact that a number of Japanese companies are saying "Let's do it here". It is now a global arena in which international companies want to be in the Pacific basin market, the north American market and the European market, and they want to set up facilities in all of those markets.
I said a moment ago that the speech of my hon. Friend the Member for Eastbourne was excellent. It is the second time he has impressed recently with his silver tongue. He was in my constituency recently, and I know that he impressed hugely all of my constituents who amassed to hear him. My hon. Friend was right to speak so bluntly about the sharp differences between the Liberal Democrats' national policies and what one hears locally on the street, which sometimes seems to be made up as they go along—and go along they do, do they not?
My hon. Friend spoke of Labour's "Business Plan for Britain". It must be right that we avoid any idea of such a national plan. The plan was the kind of book which, once one puts it down, one cannot bring oneself to pick up again.
My hon. Friend the Member for Surrey, East (Mr. Ainsworth) talked about the global theatre of business, and he was absolutely right. I was delighted to hear my hon. Friend report to the House that the Deutsche bank was to centre its investment activities, presumably at its subsidiary Morgan Grenfell. He spoke of the need for new management practices springing from inward investment, and what we learn from companies abroad, and he was absolutely right about that.
My hon. Friends the Members for Sutton and Cheam (Lady Olga Maitland) and for Ribble Valley (Mr. Evans) were also absolutely right in speaking up for their constituents and talking—as other hon. Friends have done—about the nonsense of suggesting that if we had the social chapter we could continue as if things were as they are now, thanks to Government policies.
UK companies will generate the wealth on which our future prosperity will be founded, wherever ownership comes from. These companies will win the share of world markets which is needed to keep Britain economically strong and vigorous. Britain is the preferred location for inward investment because it is demonstrably the best location.
Inward investment is all about partnership—a partnership of national, regional and local organisations and individuals from the private, public and central Government sectors—a partnership that works, with all dedicated to providing a quality service for inward investors, all working together towards the common goal of securing inward investment and its benefits for the United Kingdom.
I agree with all those hon. Members who said that the efforts already made have been more than justified by the results, but that is not to suggest a hint of complacency. We must ensure that, through British competitiveness, we continue to attract further investment—

It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

SITTINGS OF THE HOUSE

Ordered,
That this House do meet on Thursday 3rd November at half-past Nine o'clock.—[Mr. Burns.]

BUSINESS OF THE HOUSE

Ordered,
That, notwithstanding the provisions of Standing Order No. 14 (Exempted business), the Speaker shall put the Questions on the Motions in the name of Mr. Secretary Gummer relating to the draft Local Government Act 1988 (Competition) (Defined Activities) Order 1994 and the draft Local Government Act 1988 (Competition) (Defined Activities) (Construction and Property Services) Order 1994 not later than one and a half hours after the first such Motion has been entered upon; and the said Motions may be entered upon and proceeded with at any hour, though opposed.—[Mr. Burns.]

Orange Badge Scheme

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

Mr. Robert Jackson: I understand that today is the debut of my hon. Friend the Member for Slough (Mr. Watts), the new Minister for Public Transport. He and I are both lucky that this debate is taking place at a comparatively civilised time. I fear that, in the course of his Government career, he will have to face Adjournment debates at less agreeable times. On behalf of the whole House, I say that we hope that he will enjoy his job in the Government and that he will be able to make the contribution that we all know he can make.
The orange badge scheme is a very valuable facility for people with disabilities. It has existed since 1970, and during the period between 1986 and 1989 it was extensively reviewed by my hon Friend the Member for Eltham (Mr. Bottomley), who introduced a number of important modifications. They were supplemented in 1991 by announcements from the former Minister, Christopher Chope, whom we sadly miss from the House.
I think that we all understand very well the justification for the review in the late 1980s. My hon. Friend the Member for Eltham had an absolutely cast-iron justification when he pointed out that, in 1986, there were almost 800,000 valid orange badges in circulation, and that one in 20 cars in operation at that time could legally ignore some of the parking restrictions that applied to others.
I understand, therefore, that there was a need for some tightening of the rules of eligibility; I am not quarrelling with that. On the other hand, like every other hon. Member, I have been approached by constituents who were formerly thought eligible for orange badges, but who then found that they were no longer deemed to be qualified.
One category where it seems to be especially difficult to draw the line is in respect of those who, for reasons of a psychological disorder, have considerable difficulty in walking. Another category is those whose disability may be severe but intermittent. They would normally not be entitled to an orange badge.
One instance is that of a young man, cared for by his parents, who not only has severe learning disabilities but is liable to epileptic fits. During and following those fits, his mobility is severely restricted, and his parents would like to be able to park close to the facilities to which they need to take him for help. Cases like that are difficult to accommodate under the present regulations.
Another such case is that of a young man who, due to his heart condition, should not walk for long distances but, because he cannot get a badge, may find himself obliged to do so. Then there are those who have problems with bowel and bladder. Oxfordshire county council social services tell me that far more people than is generally realised suffer from those distressing conditions, and it has given me some examples. Many of those cases are not eligible under the revised regulations.
That is also true for a number of people with mental impairments and behavioural problems, which are not so severe as to make them eligible for the higher rate of mobility allowance —which is one of the conditions of eligibility.
On a lighter note, one particular case from my constituency stands out in my memory — that of Mr. Harry Crookes, who had been conducting research in the Bodleian library in Oxford on issues connected with the International Churchill Society, leading to the publication of a fascinating article, like the one published in "Finest Hour" in 1993, entitled "Fact or Fish Story? A Look at Salisbury Hall". That is the former residence of Sir Winston Churchill's mother.
The subtitle of the article was "Did the Pike caught at his mother's country home really inspire the famous RAF mosquito aircraft? And how did Winston kill the fish? A Churchillian investigates". Mr. Crookes had difficulty getting into the Bodleian library to conduct his research when he lost his orange badge, which was not reinstated despite my representations. However, I was able to persuade the Bodleian library to give him parking facilities, so at least his story ends on a happy note.
The problem with all the cases that I have mentioned is that they involve drawing a line, which will always strike those who are just on the wrong side of it as arbitrary and unjustified. Wherever we draw the line, people will have those feelings because they are in the nature of line drawing.
I guess that the Minister must consider whether the number and weight of those who feel aggrieved about the revised regulation justifies a more liberal redrawing of the boundaries. He must weigh that against the important consideration that, if the orange badge scheme is to work properly for those who need it, it must be respected by the general public. In turn, that requires the issue of orange badges to be controlled and their use to be policed.
I am concerned not about where we draw the line but about a point of principle connected with the regulations. This matter arose recently in a meeting that I had with officials of Oxfordshire county council social services, who drew my attention to a point that could be dealt with in a more flexible scheme.
Apparently, the local authority must determine whether people who do not have automatic entitlement to concessionary permits are eligible. The criteria which they are asked to apply in making that decision relates to the applicant having a disability that is permanent and substantial and causes inability to work or a considerable difficulty in walking.
May I draw attention to the word "permanent"? A problem arises for those whose condition or need for a badge is temporary. Many of us have constituents who are immobilised following a traffic accident or a surgical procedure that requires them to wear, temporarily at least, an orthopaedic plaster cast. Others may be waiting for an operation which, they hope, will cure their condition, such as a hip replacement. Their position is complicated if, as is too often the case, the date of the medical intervention and the outcome of the procedure are uncertain. Constituents have told me that, until successful surgery takes place, they are permanently disabled.
Officials of Oxfordshire social services have told me of a further category of which we should take account, despite the fact that no one in the House represents it—temporary visitors from abroad, who, if resident, would be entitled to an orange badge. Oxfordshire social services consider that, under the regulations, the condition of "permanent disability" can be interpreted as being


disabled for three or more years. That means that the disability is likely to continue for the period of the badge's validity.
They also tell me that decisions on that point are made by senior members of staff. That approach is probably as liberal as it is possible to be under the regulations, which suggests that the regulations should allow more flexibility in respect of the issuing of temporary orange badges.
Now that the system has been tightened up, and especially now that the passport photograph has been introduced, will the Minister think again about that point?

The Minister for Public Transport (Mr. John Watts): May I thank my hon. Friend the Member for Wantage (Mr. Jackson) for his generous welcome to me on my first appearance at the Dispatch Box? Certainly, 2.30 on a Friday afternoon is a good time to make a debut.
I also congratulate my hon. Friend on securing a debate on this important subject, which invokes much interest in the House and outside. My hon. Friend has been in frequent correspondence with my predecessors about this subject over the years and takes a close personal interest in it, as his speech to the House this afternoon has shown. I am grateful for this opportunity to respond to the points that he made.
My hon. Friend the Member for Wantage rightly identified a number of areas of important concern with which I shall deal. Before I respond to his specific points, however, it may be helpful for me to say a few words about the general background to the issue.
The Department of Transport has a long-standing commitment to promoting the improvement of transport facilities and opportunities for people with disabilities. Recent innovations in which the Department has played a major part include the introduction of wheelchair-accessible taxis, significant advances in bus design to improve access for elderly and ambulant disabled people and a new type of powered outdoor vehicle for road and pavement use. We now also provide funding support for two trials of low-floor, wheelchair-accessible buses in London and in north Tyneside.
Personal mobility is a major priority and the ability of disabled people to park close to the facilities and services they need is an essential part of the process. I was encouraged by what my hon. Friend the Member for Wantage said about the concession made by the Bodleian to one of his constituents who was finding access to those facilities difficult.
The orange badge scheme provides an important facility in assisting the mobility of people with disabilities. It came into operation in December 1971 by means of regulations made under section 21 cif the Chronically Sick and Disabled Persons Act 1970. The scheme has always been principally intended to help those with severe difficulty in walking, but in 1975, further regulations extended the scheme to blind people, and eligibility was extended to people with severe upper limb disabilities.
I now come to the conflict that is inevitable in such a scheme. The scheme gives great benefit, and rightly so, to those who hold the badge, but it does so at the expense of other road users who may be held up by parking that would not otherwise be allowed.
People who are close to eligibility—as my hon. Friend said, those who fall just outside the eligibility criteria—naturally want the scheme to be extended to include them. Parliament, however, as the guardian of the scheme, needs to keep eligibility under tight control, in the interests of other road users and to preserve public respect for this important scheme. For the same reasons, it is important to take firm action against abuses of the scheme when they occur.
Since the scheme began, there have been two major reviews of its operation. One started in 1976 and led to new regulations in 1983. The other started in 1986 and led to new regulations in 1992. The length of time that the review took shows the care with which my Department reviewed the scheme and its future operation.
The second review identified the main problems. Badges were being issued too freely; there were variations in the number of badges reissued by local authorities; the value of the scheme was being questioned by many people, especially when, sadly, many able-bodied motorists misused badges, which brought the scheme into some disrepute; and parking concessions for genuinely disabled people were much too limited.
In response to those problems, the changes implemented in 1992 included the introduction of a passport-style badge, which has space for a photograph of the holder of the permit. I emphasise that it does not require the photograph to be visible when it is on the vehicle, so concerns about people being targeted for whatever malicious reason as a result of the photograph being displayed should be allayed.
The second change was an increase from two hours to three in the limit on the time that people with badges could spend parked on yellow lines. Thirdly, eligibility was extended to people with a severe disability in both upper limbs who regularly drive a motor vehicle, but who cannot turn the steering wheel by hand. Fourthly, entitlement was extended to people in respect of the war pensioners' mobility supplement.
Throughout the review, we were advised by the Disabled Persons Transport Advisory Committee, a statutory body which advises the Secretary of State on transport issues affecting disabled people. Its advice has been invaluable.
I know that one of the most contentious matters of the scheme relates to the eligibility criteria. It might be helpful to give a more detailed explanation of how we have arrived at the current position. As I have said, there has been great concern about the number of badges on issue—indeed, the number on issue in England, Scotland and Wales has risen from about 800,000 in 1986 to about 1.5 million in 1993.
One of the original proposals arising from the review was to accept the Disabled Persons Transport Advisory Committee's main recommendation—that eligibility for badges should be more closely related to eligibility for the old mobility allowance. However, it became apparent during our consultation that some organisations felt that that would be too draconian a measure, and, after careful consideration, we decided not to change the scheme in that way. Instead, we wrote to the local authorities that operate the scheme requesting that they give greater emphasis to ensuring that badges are issued only to those entitled to receive them.


One change was the adoption of new measures for undertaking medical assessments of applicants for badges. Under the old scheme, the medical advice form that general practitioners had to complete when there was any doubt about an applicant's eligibility effectively put the doctor in the position of saying whether or not the applicant should be issued with a badge. That placed GPs in an invidious position.
A new medical advice form has been introduced. It requires doctors to provide factual answers to a series of questions. On the basis of those answers, the local authority can determine whether the eligibility criteria are met.
In general, the new procedures seem to have been well received, but there is always pressure to extend eligibility. I shall say a few words about that, and pick up some of the issues raised by my hon. Friend.
I know that many people think that a badge should be available to temporarily disabled people. The main difficulty with that is that having temporary badges would further increase the number in circulation, leading to the scheme possibly becoming unworkable in its current form. Their issue would also impose financial and administrative burdens on both local authorities and health authorities.
That said, I know that some authorities issue badges to people awaiting surgery—for example, for a hip replacement—on the basis that, until the surgery has taken place, those people are permanently disabled. I can understand that approach, but I think that any such judgments are best left to local authorities applying their common sense and good judgment to the permanence or otherwise of the disability that causes the problem.
I am also aware that people with psychological disorders or suffering from bowel disorders feel that they should be eligible for a badge. Provided a person's actual ability to walk is sufficiently impaired to meet the eligibility criteria, the cause of the impairment is immaterial to his or her entitlement to a badge. But I am afraid that, distressing as many of those ailments are, they are not in their own right sufficient to qualify for a badge.
Another difficult subject involves the issue of badges to those under two years of age. Children under the age of two have been ineligible for an orange badge since 1983. The rule was introduced because it was considered that disabled children below that age could reasonably be carried in a pram or pushchair, in much the same way as able-bodied children of a similar age.
I can understand the view that there should not be an age limit for qualification for an orange badge. In 1992 and 1993, we considered the question in some detail with the Disabled Persons Transport Advisory Committee. The main concern at that time was whether eligibility for a badge should be extended to children under the age of two with tracheostomies.
One of the arguments put to that committee was that, as it was obviously demanding for a parent to look after a baby with a tracheostomy, such a parent deserved all the relief that could be secured. On a humanitarian basis, everyone would have sympathy with that argument. In so far as an orange badge gives some relief from the strain of finding convenient parking for whatever purpose the journey serves, it would be of assistance.
I have a great deal of sympathy for that argument, but the DPTAC chairman advised in his report that it should not in itself be considered a reason for conceding the case. The committee recommended instead that badges should continue to be restricted to those for whom a badge is a necessity, however deserving other circumstances might be.
My hon. Friend raised the question of overseas visitors. While there is an argument for assisting someone visiting this country who has a disability that would qualify him or her if resident here, there would be considerable difficulties in administering a temporary scheme. Such badges would have to be issued for varying lengths of time, and would need to be specially identifiable as being for overseas visitors.

Mr. Robert Jackson: My hon. Friend said that he knew that some local authorities are issuing temporary badges. I understand that Oxfordshire does not believe that it has the power to do so. Can my hon. Friend make it clear to local authorities that they possess that power?

Mr. Watts: I will certainly reflect further on my hon. Friend's question. It is difficult precisely to define what is and what is not permanent. My hon. Friend cited the example of a person waiting for a hip replacement. It is arguable that, with a condition that can only be remedied after successful surgery, unless and until that surgery is completed, the individual is as permanently disabled as someone who, for other reasons, does not have the use of his or her limbs.
It is perfectly reasonable for local authorities, in exercising their judgment and discretion, to take a fairly broad view of what is permanent in some instances. However, I would be reluctant to enter into an off-the-cuff commitment to issue further guidance. My Department does not believe that that aspect causes great practical difficulty for local authorities in administering the scheme, although I acknowledge the difficulties of interpretation and judgment that must confront them. My hon. Friend described what happens in Oxfordshire, and that seems an eminently sensible way of approaching the problem.
We will always be faced with the dilemma that some people will be just excluded from the scheme who consider that their circumstances are similar to those of people who do qualify. Wherever we draw a line, there will always be claims of unfairness—and in some instances, they will be justified.
I invite my hon. Friend to agree, in the light of my remarks about the number of badges currently in issue and of the growth in that number over a relatively short time, that, if we were, with immediate effect, to permit further relaxation, we would run the risk of running into the same problems that existed before the 1986 review. So many badges would be in issue that the scheme would start to come into disrepute and motorists who were not entitled, because they are able-bodied, to parking concessions would consider the rules unreasonable, unfair and impinging too much on their right as motorists to find places to park and to have free passage on the highway.
Earlier, I mentioned some of the changes made in the medical assessment required before eligibility can be agreed. One of the points which is often raised in that connection is the matter of how far someone should have to be able to walk or how impaired their ability to walk a certain distance should be for them to be eligible for a


badge. I stress that, although one of the questions which doctors have to answer relates to how far the applicant can walk, there is no particular statutory distance laid clown in the regulations to determine how far they need to be able to walk before they cease to be eligible for a badge.
That is another instance in which the freedom of discretion available to local authorities in exercising their administration of the scheme works to the advantage of disabled people. If we were to have a rigid distance limit—beyond that point, no eligibility, up to that point, eligibility—it would make it difficult for other relevant factors to be taken properly into account. It is clearly advisable that they should have the right to take those other factors into account in deciding whether a badge should be issued.
It is also important that we always look on this scheme in the context of the whole panoply of measures which the Government, across Departments, seek to take to make life easier for disabled people. In the case of my Department, that is especially true with regard to public transport.
Under the Railways Act 1993, there is an obligation on rail service operators to publish a code of practice and a plan as to how they will ensure that the needs of disabled travellers are met. There is already the extensive availability of wheelchair access ramps, so that, for example, I believe that the whole inter-city network is now wheelchair-accessible. The rail regulator and the franchising director will pay particular attention to the way in which the needs of disabled people are taken into account in the services which franchisees offer under the new franchising arrangements.
The scheme is valuable and extensive. It allows badge holders to park free of charge and without time limit at parking meters, or in other places where other people may only park for a limited time. They may also park on single or double yellow lines for up to three hours in England and Wales, although, in that case, they have to display a time clock, so that there is certainty that no abuse is committed. However, in Scotland, they are allowed to

park without time limit. They must not, of course, park in bus lanes, which would affect the mobility of other people, including disabled people using public transport. They must not park where loading or unloading vans are in force, or where there is a double white line in the centre of the road, which would clearly be a safety hazard.
However, the scheme provides exemption from other parking restrictions. For example, orange badge holders cannot be wheel-clamped. Badge holders, though, still have the same obligation as other road users to ensure that they do not park dangerously or obstructively.
The scheme does not cover off-street car parks, and it is often argued that it should. But there is a good counter-argument that many local authorities choose to make special provision for disabled drivers, such as reserving for them parking spaces which are most convenient for points of exit from a car park, or those which are nearest to the shops which a car park serves.
It is right and proper that local authorities do that, but most people would accept that a general free concession in car parks is not justifiable, since a disabled driver finding a convenient car parking space in a car park is in no different a position from any other motor car user seeking somewhere to park his car while he goes about his business. However, I certainly commend and encourage local authorities to try to maximise the provision of parking spaces reserved for disabled people in places which are convenient for them to use.
I hope that my hon. Friend will conclude from my remarks that the Government are strongly committed to making life as convenient as possible for disabled people in moving about this country. While I cannot announce any immediate changes to the scheme, I thank my hon. Friend for bringing the matter before the House again today. It is important that it should be constantly before the House, so that, over time, we may take account of the very powerful arguments which he has advanced in support of disabled people.

Question put and agreed to.

Adjourned accordingly at one minute to Three o'clock.